OCBC Bank - RHB Invest 2024-04-16: Where Could 1Q24 Results Surprises Come From

• OCBC Bank will announce its 1Q24 results on 10 May (see earnings calendar). While we expect OCBC's 1Q24 PATMI to be seasonally higher q-o-q, the y-o-y figure may be lower – partly due to a low cost of credit of 12bps in 1Q23 (2024 guidance: 20-25bps).
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Net-interest income (NII) could be muted with loan growth still soft …

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• Overall, OCBC's 1Q24 loan growth is likely to be within the low-single digit growth guidance.

… while net interest margin (NIM) is likely to be squeezed.

• 1Q24 average NIM should be lower q-o-q and y-o-y vs 4Q23 (2.29%) and 1Q23 (2.30%) as 2023 exit NIM was 2.26% and loan yields may have peaked.
• OCBC guided for 2024 NIM of 2.2- 2.25% based on the assumption of four rate cuts in 2H24 (2023: 2.28%). Market expectations on the timing and number of rate cuts this year have been pushed back and scaled down.
• The difference (between OCBC’s assumption and market expectations) should not be too material to NIM, as the additional rate cuts OCBC assumes would have occurred towards the back end of 2024, we believe.

Better non-interest income (non-II) q-o-q expected

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Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2024-04-16 SGinvestors.io

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