- OCBC (SGX:O39)’s 1Q24 earnings were ahead of MIBG/Street expectations on stronger trading, insurance and fees. Net-interest income is also holding up.
ROE on track. Capital use for Great Eastern deal, off-track?
- - Read this at SGinvestors.io -
- On the other hand, OCBC’s bid to privatise Great Eastern (SGX:G07) has limited synergistic value, in our view. Plus, there are risks the offer price may have to be raised in order to close the deal.
- Returning excess capital to OCBC's shareholders is a better option, in our view.
On track for ROE delivery
- - Read this at SGinvestors.io -
- Wealth also saw a turnaround (+20% y-o-y, +17% q-o-q). We expect this trend to strengthen as clients increase allocations to higher fee activities.
- Net-interest margins (NIM) fell -3bps y-o-y and -2bps q-o-q, while loans momentum saw improvement (+2.3% y-o-y). Higher for longer interest rates may give NIMs better support in 2024E, although funding costs need to be watched (CASA fell -13bps q-o-q).
- We think OCBC’s current momentum should support ROEs in the upper-end of management guidance of 14%.
Great Eastern offer: Limited value creation seen
- Read more at SGinvestors.io.
