OCBC - DBS Research 2024-08-06: Lowering NIM Guidance

• OCBC (SGX:O39) reported 2Q24 revenue of S$3,629mil (+5% y-o-y, flat q-o-q) with net profit of S$1,944mil (+14% y-o-y, -2% q-o-q), ~7% above consensus.

Operating costs of S$1,373mil grew 3% y-o-y, 2% q-o-q, led by higher staff, IT-related, and business promotion expenses.

• - Read this at SGinvestors.io -
• OCBC's capital ratios remained strong, with CET1 at 15.5% (1Q24: 16.2%), down q-o-q as profit accretion from 2Q24 was more than offset by the payment of FY23 final dividend and increase in RWA while total CAR was 17.9% (1Q24: 18.4%).
• 2Q24 net interest income (NII) of S$2,430mil rose 2% y-o-y, flat q-o-q, with 3% asset growth q-o-q and 1% loan growth q-o-q, offset by a 7bps q-o-q decline in NIM, mainly from growth in lower yielding high-quality assets and tightening of loan yields due to market rate movements.

Higher non-interest income supported by growth across insurance and net gains from sale of investment securities and others.

• - Read this at SGinvestors.io -
• Trading income of S$356mil (+14% y-o-y,-4% q-o-q) saw lower customer flow income q-o-q alongside flat non-customer flow income.
• Meanwhile, profit from Great Eastern (SGX:G07) stood at S$294mil (+12% y-o-y, +2% q-o-q), buffered this quarter, supported by net gains of S$83mil (+32% y-o-y, +63% q-o-q) from the sale of investment securities and others.

2Q24 saw lower credit costs of 15bps (1Q24: 16bps), as writeback in general allowances offset higher specific allowances.

• Read more at SGinvestors.io.

Rui Wen LIM DBS Group Research | https://www.dbs.com/insightsdirect/ 2024-08-06 SGinvestors.io

---