SGX-listed Oversea-Chinese Banking Corporation Limited, or OCBC Bank (SG:O39), will report its half-yearly earnings for 2023 tomorrow. Analysts maintain a positive outlook on the earnings of Singapore banks for this quarter and anticipate that the net interest income has reached its highest point. In June, Singapore experienced a second consecutive month of softening inflation, with the overall rate reaching 4.5%, down from May’s 5.1%. This indicates the country’s inflation has reached its peak, and so have the interest rates.
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Analysts are also eager to gain insights into the recovery in loan growth and wealth management fees. Moving forward, the bank will have to rely on these factors to maintain its growth momentum, as net interest income, which has been the primary driver of banks’ earnings in recent quarters, will now fade.
Based in Singapore, OCBC Bank holds the distinction of being the oldest bank in the country. It offers a range of services, including banking, asset management, insurance, and treasury services, primarily operating in Singapore, Malaysia, Indonesia, and China.
Upcoming Earnings
According to TipRanks, the consensus EPS forecast for OCBC is S$0.4 for the second quarter, up from S$0.33 per share recorded in the same period last year. The sales forecast for Q2 is around S$3.26 billion. This shows growth of around 13% on a year-over-year basis. Analysts expect the net income of the bank for Q2 to reach S$1.77 billion, which would be almost 20% up as compared to Q2 2022. However, the figure is lower than the net income of S$1.88 billion reported in the previous quarter.
Analysts also expect a notable increase in business and consumer loans, possibly indicating improved market conditions. This could also boost customers’ sentiments towards wealth management products, potentially leading to increased fees for the bank.
Is OCBC Share a Good Buy?
In terms of share price growth, analysts are not that optimistic about the bank’s stock. Recently, analysts have predicted a downside in the share price ahead of earnings. YTD, the stock has been trading up by 11.3%.
Based on the analyst consensus from TipRanks, O39 stock has received a Moderate Buy rating, supported by a total of 11 recommendations. This includes four Buy versus seven Hold ratings.
At an average target price of S$13.94, analysts are projecting a modest growth of 5.6% from the current level.
