To The Moon

🌟🌟🌟Wow!  This morning OCBC hit a 52 week record high at SGD 15.06 according to my Tiger App Market Monitor. OCBC $ocbc bank(O39.SI)$  was up 2.5% on Monday, making it the best performer among the 3 local banks.  In contrast $DBS Group Holdings(D05.SI)$  rose 1.8% and $UOB(U11.SI)$  was up 1.4%.  Together all 3 banks helped to push $STI ETF(ES3.SI)$  up by 1.2%.

I am so happy to see OCBC finally making waves in the Singapore Market after lagging behind the other 2 banks.  

On August 2, OCBC announced a stellar first half 2024 earnings results.  Its Net Profit rose by 9% to a record SGD 3.93 billion as compared to SGD 3.59 billion from the previous year.

OCBC's strong performance was due to the broad based income growth which surpassed SGD 7 billion for the first time, lifted by higher net interest income and non interest income. 

Operating expenses were well controlled with cost to income ratio improving to 37.5%.  Allowances were 14% lower at SGD 313 million.  Customer loans grew 3% while asset quality remained sound with non performing loan ratio trending lower to 0.9%.

OCBC maintained its healthy capital funding and liquidity positions.  Return on Equity on an Annualised basis improved to 14.5% and earnings per share was higher at SGD 1.74.

CET1 ratio is a healthy 15.5%.

OCBC Group CEO Helen Wong has done an excellent job since she took over from Samuel Tsien who retired after 14 years with the bank.  She was the first woman to head a Singapore Bank.

In May this year, OCBC made a voluntary unconditional general offer for Great Eastern Holdings.  At the close of the offer on July 12 2024, OCBC increased its stake by 4.88% to 93.32%.  OCBC had also completed the acquisition of PT Bank Commonwealth Indonesia in May 2024.

OCBC's reasons to buy up all the shares of Great Eastern was to reinforce its strategic vision to become Asia's leading wealth management player .  This move is also in line with OCBC's rebranded corporate strategy to strengthen its key pillars of banking, wealth management and insurance.

I was also happy with OCBC Board of Directors' decision to raise its interim dividend to 44 cents per share, up 10% or 4 cents from a year ago.  The interim dividend payout will amount to SGD 1.98 billion, representing a payout ratio of 50%.

OCBC's current dividend yield is 5.73% which is much better than putting money into Singapore Treasury Bills and Singapore Term Deposits. 

Performance wise OCBC is up 16% year todate and in 2023, OCBC has risen by 19.7%.  But if we look back at 5 years ago, OCBC is up 35%.

Financial analysts are Bullish on OCBC with an average Target price of SGD 16.23, an upside potential of 8%.

I have invested in OCBC since 2020 and it has rewarded me with its nice juicy dividends as well as capital growth.  As the 2nd largest bank in Singapore, OCBC has a wide moat due to its extensive distribution network in the region.

OCBC is my tactical defensive bet on the future of Singapore's economy which is the jewel of South East Asia.  OCBC is also part of my long term core portfolio which will help me achieve my goal of FIRE - Financial Independence Retire Early. 

As the late Charlie Munger likes to say " The first rule of compounding is Never Interrupt it unnecessarily." 

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