Is OCBC The Most Undervalued of the 3 Singapore Banks?

🌟🌟🌟OCBC $ocbc bank(O39.SI)$  has recently reached its 52 week high at SGD 17.00 but has since retraced to SGD 16.68 on Thursday's closing.    This is due to the Bearish sentiments after the US Feds forecast for fewer interest rate cuts in 2025 due to sticky inflation.

OCBC has a sterling year with its shares up 29% year todate and 33.9% in 2023.    It reported Net Profit of SGD 1.97 billion for Q3 24 which was 9% than the previous year quarter of SGD 1.81 billion.   This is also 2% higher than Q2 24 when OCBC reported SGD 1.94 billion.  Net Profit for the 9 months of 2024 has increased 9% from a year ago to SGD 5.9 billion.

OCBC's strong year on year performance for Q3 24 was driven by robust non interest income growth and lower allowances.  Increased wealth management activities lifted fee and trading income with insurance income higher as well.

Cost to income ratio improved from the previous year to 38.5%.  Asset quality remained resilient with non performing loan ratio declining to 0.9%.  In contrast $DBS Group Holdings(D05.SI)$  non performing loan ratio was 1.0% while $UOB(U11.SI)$  maintained a stable non performing loan ratio at 1.5%.  These figures show that all 3 banks  have done well in managing their credit risk with OCBC, the best performer among them. 

OCBC's customer loans grew 4% from previous year.  On an annualised basis , Return on Equity rose to 14.1% and Earnings per share increased to SGD 1.73.

The stand out performer for OCBC for the quarter was Non interest income which grew 41% to SGD 1.37 billion.  This is due to several factors.  Net fee income rose 10% to SGD 508 million, underpinned by higher wealth management, investment banking and loan created fees.  In particular, wealth management fees climbed 25% from previous year, reflecting increased customer activities across all wealth product channels.

Net trading income more than doubled to a new quarterly high of SGD 508 million.  Customer flow treasury income rose to a record SGD 306 million driven by both corporate and wealth segments.  Improved investment performance across Global Markets and Great Eastern Holdings lifted non customer flow treasury income. 

Insurance income from Great Eastern increased 6% to SGD 233 million, supported by robust business performance. 

OCBC's wealth management income was SGD 1.29 billion which is 15% higher than previous year and contributed 34% to OCBC 's total income.  Group wealth management Assets Under Management was SGD 284 billion, up 5% from SGD 270 billion in the previous year from both new net money inflows and improved market valuation. 

OCBC CET 1 ratio on 30 September 2024 was 17.2%.

In determining why OCBC is the most undervalued of the 3 Singapore banks, let's check out its financial metrics. 

Price to Net Asset Value (P/NAV)  - OCBC 's P/NAV is 1.05 times which is the lowest of the 3 banks. 

Price to Book ratio (P/B) ratio - OCBC' s P/B ratio is 1.27 times, which is lower than UOB's 1.33 times and DBS's 1.81 times 

Cost to income ratio (CIR) -  OCBC's CIR is 37.8% which is lower than DBS's 39.6% and UOB's 41.5%.

Net Interest Margin (NIM) - OCNC's NIM is 2.27% which is higher than DBS's 2.14% and UOB's 2.05%.

Dividend Yield - OCBC is the best among the 3 banks with the highest dividend yield at 5.3% while DBS is 4.7% and UOB is 4.9%.

That is why OCBC is the most undervalued of the 3 banks. 

I am so happy with the performance of OCBC which I have invested since 2021.  In that time frame, OCBC has rewarded me with both  capital growth and solid dividends. 

My strategy to buy and hold OCBC long term is certainly worthwhile  as it allows the magic of compounding to happen. 

Go Long Go Strong Go OCBC! 😍😍😍🚀🚀🚀🌛🌛🌛🌈🌈🌈💰💰💰🇸🇬🇸🇬🇸🇬

@Daily_Discussion  @Tiger_SG  @TigerStars  @Tiger_comments @MillionaireTiger  @CaptainTiger