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.
Above is an excerpt from a report by Maybank Research. Clients of Maybank Securities may be the first to access the full PDF report @ https://www.maybanktrade.com.sg/.
