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Oversea-Chinese Banking Corporation (OVCHF)
:OVCHF
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Positive Factors
Capital Return
OCBC has reiterated its commitment to the two-year S$2.5bn capital return, including a special dividend equivalent to a 10% dividend payout ratio and ~S$1bn share buyback.
Growth Strategy
Driving growth across Asia to achieve ~13%-14% ROE by 2025 through a refreshed strategy and four growth pillars.
Non-Interest Income
Trading income rose 6% YoY from higher customer flow income, while insurance income was up 6% YoY supported by robust underlying business performance.
Negative Factors
Asset Quality
Deteriorating asset quality and higher-than-expected NPLs pose risks to earnings.
Loan Growth
Slower loan growth, declining NIMs, and muted wealth management fees indicate downside risks.
Trade War Impact
Potential sequential impact from an escalating trade war suggests caution.
OCBC (OVCHF) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$56.83B
Dividend Yield5.03%
Average Volume (3M)60.00
Price to Earnings (P/E)10.1
Beta (1Y)0.37
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees33,656
SectorFinancial
Sector Strength83
IndustryBanks - Regional
Share Statistics
EPS (TTM)0.32
Shares Outstanding4,514,995,600
10 Day Avg. Volume0
30 Day Avg. Volume60
Financial Highlights & Ratios
PEG Ratio16.23
Price to Book (P/B)1.24
Price to Sales (P/S)0.00
P/FCF Ratio-4.46
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$12.88Price Target Upside1.82% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
OCBC Business Overview & Revenue Model
Company DescriptionOversea-Chinese Banking Corporation Limited provides financial services in Singapore, Malaysia, Indonesia, Greater China, rest of the Asia Pacific, and internationally. The company's Global Consumer/Private Banking segment provides products and services to individual customers, including checking accounts, and savings and fixed deposits; housing and other personal loans; credit cards; wealth management products consisting of unit trusts, banc assurance products, and structured deposits; and brokerage services. This segment also offers investment advice and portfolio management, estate and trust planning, and wealth structuring services for high-net-worth individuals. Its Global Wholesale Banking segment provides project financing, short-term credit, working capital, and trade financing; customized and structured equity-linked financing products; cash management and custodian services; capital market solutions; corporate finance and advisory banking services; and treasury products. This segment serves corporates, public sector, and small and medium enterprises. The company's Global Treasury and Markets segment is involved in the foreign exchange activities, money market operations, and fixed income and derivatives trading, as well as provision of structured treasury products and financial solutions. Its Insurance segment provides fund management services, and life and general insurance products. The company's Others segment is involved in property and investment holding activities. The company operates approximately 430 branches and representative offices in 19 countries and regions. Oversea-Chinese Banking Corporation Limited was founded in 1912 and is headquartered in Singapore.
How the Company Makes Money
OCBC Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q3-2024)
| % Change Since: -1.02%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Positive
The earnings call highlighted OCBC's strong financial performance, with record net profit and income driven by wealth management and noninterest income growth. However, challenges such as flat net interest income and increased operating expenses were noted. Overall, the positive aspects outweigh the negatives, indicating robust business health and strategic growth initiatives.Q3-2024 Updates
Positive Updates
Record Net Profit and Income
OCBC reported a net profit of SGD 1.97 billion for Q3 2024, up 9% year-on-year, with total income reaching a record SGD 3.8 billion.
Strong Wealth Management Performance
Group wealth management income grew 15% year-on-year to SGD 1.29 billion, contributing to a third of the group's total income. Assets under management reached a record SGD 284 million.
Improved Cost-to-Income Ratio
The cost-to-income ratio improved to 38.5% year-on-year, driven by positive operating jaws.
Record Noninterest Income Growth
Noninterest income surged 41% year-on-year, driven by higher fee, trading, and insurance income.
Healthy Loan Growth and Portfolio Quality
Loan portfolio expanded by 12% year-on-year, with a stable NPL ratio at 0.9%.
Sustainable Financing Growth
Sustainable financing loan volume expanded 31% year-on-year to SGD 47 billion, making up 15% of group loans.
Strong Capital Position
CET1 ratio increased to 17.2% on a transitional basis, with a fully phased-in CET1 ratio of 15.6%.
Negative Updates
Flat Net Interest Income
Net interest income was generally flat at SGD 2.43 billion due to declining interest rates and increased funding costs.
Declining Net Interest Margin
Net interest margin for the quarter was 2.18%, down from 2.22% for the nine-month period, indicating pressure from rising funding costs.
New Nonperforming Asset in Hong Kong
A new corporate NPA in Hong Kong related to real estate was reported, although it is largely secured.
Increased Operating Expenses
Operating expenses for the quarter rose 9% year-on-year, driven by higher business volume costs and technology expenses.
Company Guidance
In the third quarter of 2024, OCBC reported a net profit of SGD 1.97 billion, marking a 9% increase year-on-year and a 2% rise quarter-on-quarter, driven by a record total income of SGD 3.8 billion. The bank's net interest income remained stable at SGD 2.43 billion, while noninterest income surged 41% year-on-year to SGD 1.37 billion. The cost-to-income ratio improved to 38.5%, reflecting positive operating jaws. Loan growth was robust, with an expansion of 12% year-on-year on a constant currency basis, and the NPL ratio remained low at 0.9%. The bank's CET1 ratio was 17.2% on a transitional basis and 15.6% on a fully phased-in basis. Wealth management income grew 15% year-on-year to SGD 1.29 billion, with assets under management reaching a record SGD 284 million. The bank highlighted its strategic focus on maintaining a strong capital position, pursuing growth opportunities, and increasing shareholder returns. Looking forward, OCBC expects the full-year NIM to be around 2.2%, with noninterest income projected to grow in double digits, counterbalancing potential declines in NII. The bank remains confident in its ability to navigate uncertainties and capitalize on growth prospects in the ASEAN region.OCBC Financial Statement Overview
Summary
OCBC demonstrates strong financial performance with significant revenue and net income growth, a robust balance sheet with zero debt, and a high equity position. However, the decline in cash flow from operations suggests potential challenges in cash generation, impacting the overall financial score.Income Statement
OCBC has demonstrated strong revenue growth, with a significant increase from $13.4B in 2023 to $14.4B in 2024, marking a growth rate of 7.45%. The net profit margin for 2024 is impressive at 52.57%, up from 52.26% in 2023. Despite the lack of reported EBIT and EBITDA margins for 2024, the company has maintained high profitability, indicating efficient cost management and strong operational performance.85
Very Positive
Balance Sheet
OCBC exhibits a robust equity position, with a stockholders' equity of $59.3B against total assets of $625B, resulting in an equity ratio of 9.49%. The bank's debt-to-equity ratio has improved significantly, with total debt reduced to zero in 2024, reflecting prudent financial management. Return on equity remains strong at 12.79%, although slightly below the previous year's 13.27%, indicating stable shareholder returns.78
Positive
Cash Flow
The cash flow statement shows a substantial decrease in operating cash flow from $9.1B in 2023 to $3.96B in 2024, impacting the operating cash flow to net income ratio. Free cash flow decreased to $3.35B in 2024 from $8.59B in 2023, resulting in a negative free cash flow growth rate of -61.01%. The free cash flow to net income ratio remains positive, suggesting ongoing capability to generate cash despite challenges.72
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 10.62B | 14.44B | 13.44B | 11.19B | 10.49B | 10.08B | Gross Profit |
| 3.80B | 14.44B | 0.00 | 0.00 | 0.00 | 0.00 | EBIT |
| 4.84B | 8.63B | 9.27B | 7.47B | 6.69B | 5.34B | EBITDA |
| 5.55B | 0.00 | 9.82B | 8.00B | 7.21B | 5.87B | Net Income Common Stockholders |
| 5.54B | 7.59B | 7.02B | 5.53B | 4.86B | 3.59B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| -34.29B | 34.60B | 28.87B | 61.65B | -7.65B | -7.44B | Total Assets |
| 581.42B | 625.05B | 581.42B | 559.96B | 542.19B | 521.39B | Total Debt |
| 38.90B | 0.00 | 38.90B | 22.63B | 29.78B | 35.42B | Net Debt |
| -10.72B | -34.60B | -49.62B | -39.02B | -20.30B | -22.02B | Total Liabilities |
| 527.12B | 564.67B | 525.87B | 505.29B | 489.05B | 471.42B | Stockholders Equity |
| 52.92B | 59.32B | 52.92B | 53.09B | 51.47B | 48.42B |
| Cash Flow | Free Cash Flow | ||||
| -16.36B | 3.35B | 8.59B | 8.45B | -31.28B | -31.88B | Operating Cash Flow |
| 8.42B | 3.96B | 9.13B | 8.93B | 10.80B | 6.48B | Investing Cash Flow |
| -14.05B | -4.33B | -10.45B | -1.51B | -29.71B | -9.33B | Financing Cash Flow |
| 8.08B | 70.00M | 355.00M | 628.00M | 20.02B | 5.91B |
OCBC Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
| $56.83B | 10.11 | 13.78% | 5.03% | ― | ― | ||
64 Neutral | $12.85B | 9.81 | 7.59% | 16985.65% | 12.30% | -7.71% | |
| $99.43B | 12.05 | 17.99% | 4.68% | ― | ― | ||
| $11.92B | 24.29 | 35.32% | 2.38% | ― | ― | ||
| $45.65B | 10.56 | 13.43% | 4.79% | ― | ― | ||
72 Outperform | S$1.13B | 10.86 | 4.99% | 5.46% | 3.85% | 11.43% | |
66 Neutral | S$12.21B | 12.27 | 12.01% | 3.49% | 23.83% | 28.49% |
* Financial Sector Average
Performance Comparison
OVCHF
OCBC
12.65
2.82
28.69%
DBSDF
DBS Group Holdings
35.53
10.40
41.38%
SPXCF
Singapore Exchange
11.15
4.46
66.67%
UOVEF
United Overseas Bank (Singapore)
28.11
6.87
32.34%
SG:G07
Great Eastern Holdings Limited
25.80
0.14
0.55%
SG:S41
Hong Leong Finance Limited
2.51
0.23
10.09%
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.