OCBC - Maybank Research 2024-08-02: Delivering On Strategy; Dividend Visibility Despite Rising Rate Cut Risks

• OCBC (SGX:O39)’s 1H24 core-earnings were ahead of MIBG/Street expectations on stronger insurance and trading gains. Net interst income (NII), while holding up, is seeing deceleration in light of falling NIMs and tepid loans.
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• Nevertheless, a strong capital base and potential excess capital returns if full ownership of Great Eastern is achieved, provides strong dividend visibility.

Non-interest income mixed signals

• While 2Q24 non-interest income (NoII) made up 33% of OCBC's total income – the highest since 2022 - this was led by insurance and trading gains.
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  • Trading income is also showing slower momentum falling -4% q-o-q.
• In less volatile fees, loan and trade related fees are improving (+8% q-o-q). However, wealth management which historically account for more than 40% of contribution fell -7% q-o-q. This points to clients pursuing lower fee generating activities.
• We look towards 3Q for turnaround.

Slower net interest income growth, with Fed cut risks

• Read more at SGinvestors.io.

Thilan Wickramasinghe Maybank Research | https://www.maybank-ke.com.sg/ 2024-08-02 SGinvestors.io

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