To The Moon

🌟🌟🌟OCBC $ocbc bank(O39.SI)$   is Singapore's second largest bank and also the second largest in South East Asia with a market capitalisation of SGD 69.53 billion.  Its share price has been on a tear recently, reaching its 52 week high of SGD 15.69.

In order to determine whether OCBC is a good buy, let's check out its latest earnings report on August 2 2024.

OCBC reported Net profit of SGD 3.93 billion for the first half of 2024 (1H 24), 9% higher compared to SGD 3.59 billion from 1H 23.

OCBC's strong 1H 24 performance was due to broad based income growth which surpassed SGD 7 billion for the first time, lifted by higher net income and non interest income.

Operating expenses were well controlled with Cost To Income Ratio improving to 37.5%.  Customer loans grew 3% in constant currency terms, while asset quality remained sound with non performing loan ratio lower to 0.9%.  This is the lowest among the 3 Singapore banks.  In contrast $DBS Group Holdings(D05.SI)$  is 1.1% while $UOB(U11.SI)$  is 1.5%.

For 1H 24, OCBC net profit climbed 9% to SGD 3.93 billion, lifted by record total income and lower allowances.  Net interest  income rose 3% to a new high of SGD 4.87 billion.  Non interest income rose 15% to SGD 2.39 billion from broad based growth across various businesses. 

OCBC's wealth management income rose 14% to a record SGD 2.54 billion.  These include income from insurance, private banking   premier private client, premier banking, asset management and stock broking.  OCBC wealth management  income accounted for 35% of its 1H24 total income, up from 33% a year ago.  OCBC's wealth management Assets Under Management reached a new high of SGD 279 billion, up from SGD 274 billion in the previous year. 

For 2Q 24, OCBC net profit of SGD 1.94 billion was up 14% compared to 2Q23, driven by income growth and a decline in allowances.  Net interest income grew 2% to SGD 2.43 billion from previous year.  Non interest income rose 13% to SGD 1.2 billion from robust fees, trading and insurance income growth. 

OCBC CET-1 ratio is 15.5%, the highest among the 3 Singapore banks.  The Board of Directors have declared an interim dividend of 44 cents per share, which is up 10% from a year ago.  The interim dividend payout will amount to SGD 1.98 billion, representing a payout ratio of 50%.

During the year, OCBC made a SGD 1.4 billion bid on May 10 to take its insurance arm Great Eastern $Great Eastern(G07.SI)$ private.  In the process OCBC has raised its stake from 88.4% to 93.3% as at 12 July 2024.  Great Eastern is the largest and oldest life insurance company in Singapore and Malaysia. 

OCBC has completed its acquisition of PT Bank Commonwealth Indonesia on May 1 2024, deepening its Indonesian presence.  This acquisition brings more than 1.2 million customers of PT Bank Commonwealth Indonesia to OCBC Indonesia.  Indonesia is one of the fastest growing economies in South East Asia and the largest. 

The recent barrage of stimulus measures by the Chinese authorities will also benefit OCBC as North Asia accounts for 23% of OCBC's loan books.   This may result in higher loan growth in the future. 

CEO Helen Wong has done an excellent job since taking over the top job in OCBC  on April 15 2021.

Financial Analysts are bullish on OCBC with a Buy rating, Target price ranging from SGD 19.40 to SGD 14.90.  

I have invested in OCBC since 2021 and in that time, it has rewarded me with generous dividends.  The current dividend yield of 5.95% is a great source of passive income. 

OCBC is due to report its Q3 24 Earnings on November 8.  I believe that OCBC offers the best value among the 3 Singapore banks. 

Go Long Go Strong Go OCBC! 🚀🚀🚀🌛🌛🌛💰💰💰

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