Stop Using P/B to Value Bank Stocks. Here's What Actually Tells You If OCBC Is Safe πŸ¦–

The Investing Iguana
07-16

Stop Using P/B to Value Bank Stocks. Here's What Actually Tells You If OCBC Is Safe πŸ¦–

πŸ” The Angle

The most dangerous thing about bank stocks today is how "safe" they look when you only check P/B and headline yield. OCBC’s balance sheet is a fortress, CET1 at 17.0%, NPL at 0.9%, and NIM still above my 1.5% soft floor, yet it still fails my retirement income test on yield alone. The tension is simple, the regulators and depositors are perfectly protected, but that does not mean your CPF and SRS cashflow is.

πŸ’° What It Means For You

If you are using OCBC for drawdown, a 3.06% ordinary yield and 3.64% including specials does not clear my 4.7% hurdle, even with that kind of capital strength. Iggy's Forensic Zone: Zone 4, Caution, tells you this is a watchlist bank for income, not a deployment bank at today’s price. Until either the ordinary dividend rises or the price corrects enough to push yield above that floor plus risk premium, you are taking equity volatility without being properly paid for it.

πŸ“Ί YouTube: https://youtu.be/j1CeJifT8y4

πŸ“© Substack: https://investingiguana.com/p/stop-using-pb-to-value-bank-stocks

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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