Stop Using P/B to Value Bank Stocks. Here's What Actually Tells You If OCBC Is Safe 🦖
Stop Using P/B to Value Bank Stocks. Here's What Actually Tells You If OCBC Is Safe 🦖
🔍 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.
💰 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.
📺 YouTube: https://youtu.be/j1CeJifT8y4
📩 Substack: https://investingiguana.com/p/stop-using-pb-to-value-bank-stocks
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