PhillipCapital remains overweight on banks ahead of FY2021 results, OCBC 'most attractive'

MMMia
2022-02-09

With attractive dividend yields, excess capital ratios and interest rates dipping slightly in January, PhillipCapital Research analyst Glenn Thum remains positive on Singapore banks.“Bank dividend yields are attractive with upside surprise due to excess capital ratios. Improving economic conditions and rising interest rates remain tailwinds for the banking sector. Singapore Exchange (SGX) is another beneficiary of higher interest rates,” writes Thum.In a Feb 9 note, Thum is maintaining “overweight” on the sector.Oversea-Chinese Banking Corporation (OCBC) is a “buy” with a target price of $14.22 and a dividend yield of 4.32%, with total returns of 14.04%. “Valuations for OCBC are the most attractive and largest upside surprise from dividends.”Investors should “accumulate” DBS Group Holdings and United Overseas Bank Limited (UOB), writes Thum, with target prices of $35.90 and $31.30 respectively. The two banks offer total returns of 1.62% and 1.82% respectively, according to Thum’s forecasts.

Thum’s 4QFY2021 PATMI estimates are $1.4 billion for DBS (consensus: $1.48 billion), $1.3 billion for UOB ($0.97 billion) and $1.1 billion for OCBC ($1.12 billlion).The three local banks will be releasing their 4QFY2021 results this month, with DBS on Feb 14, UOB on Feb 16 and OCBC on Feb 23. “For DBS, we have forecasted revenue of $3.18 billion for 4QFY2021 (consensus: $3.61 billion). For UOB, we have forecasted revenue of $2.66 billion ($2.52 billion). For OCBC, we have forecasted revenue of $2.45 billion ($2.7 billion).Interest rates were down slightly in January. The 3M-SOR was down 5 basis points m-o-m to 0.32% while the 3M-SIBOR remained flat m-o-m at 0.44%.Meanwhile, Hong Kong and Malaysia loans growth continued in December. Hong Kong’s domestic loans growth increased to 3.79% y-o-y but fell by 0.84% m-o-m in December. The loans growth for December showed a slight dip from the previous month, but it was still the fourth-highest positive loans growth y-o-y recorded for 2021.

Malaysia’s domestic loans growth saw an increase of 4.51% y-o-y in December and rose 0.53% m-o-m in December. The increase y-o-y in December was the highest recorded since May 2019.Preliminary Securities Daily Average Value (SDAV) for January fell 20% y-o-y to $1,194 million, as the Covid-19 situation stabilised in Singapore and community cases continued to fall.The top five equity index futures turnover saw an increase of 1.7% y-o-y in January to 14.99 million contracts mainly due to the higher trading volumes of its Nifty 50 Index Futures and Nikkei 225 Index Futures.Notably, the FTSE China A50 Index Futures increased 4.9% m-o-m to 8.6 million despite the introduction of HKEX’s MSCI China A50 Connect Index futures and the FTSE Taiwan Index Futures increased 23% m-o-m to 1.1 million.As at 1.05pm, shares in DBS are trading 29 cents higher, or 0.79% up, at $36.87; while shares in UOB are trading 11 cents lower, or 0.34% down, at $32.54; and shares in OCBC are trading 4 cents higher, or 0.30% up, at $13.17.

$OVERSEA-CHINESE BANKING CORP(O39.SI)$

SGX Stocks Opportunities
Share SGX companies' analysis and opportunities with Tigers!
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.

Comments

  • glorify
    2022-02-10
    glorify
    OCBC is still room to run as DBS & OCBC moved like rocket🚀. All 3  Banks are solid & safe for long term investment. With raising interest rate is a plus to banking stocks!
    💪👌👍🚀🚀🚀🚀🚀🚀🚀🚀
  • chaicka
    2022-02-10
    chaicka
    Market has been overly underrating OCBC for quite awhile. The subtle silent gem 💎 for FA-based investors. [Grin][Grin][Grin]
  • KVR79
    2022-02-10
    KVR79
    Let monitor results
  • dryGin
    2022-02-10
    dryGin
    Go go go
  • Ttl
    2022-02-10
    Ttl
    wo
  • BBBBBBBBBB
    2022-02-09
    BBBBBBBBBB
    K
Leave a comment