OCBC (O39) AI Stock Analysis

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OCBC

(SGX:O39)

Rating:77Outperform

Price Target:

S$18.00

▲(12.57%Upside)

OCBC's overall stock score is driven primarily by its strong financial performance, characterized by revenue growth and a strong balance sheet. The valuation is also a significant positive factor due to the attractive P/E ratio and high dividend yield. However, technical analysis presents a mixed picture, which slightly tempers the score.

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.

Wealth Management

Wealth management fees rose 18% YoY from higher customer activities and from a higher AUM base.

Negative Factors

Asset Quality

Deteriorating asset quality and higher-than-expected NPLs pose risks to earnings.

Economic Outlook

The earnings growth forecast for FY25 is on shaky ground due to a dampened economic outlook.

OCBC (O39) vs. iShares MSCI Singapore ETF (EWS)

Market Cap

$72.31B

Dividend Yield10.97%

Average Volume (3M)5.23M

Price to Earnings (P/E)9.6

Beta (1Y)1.06

Revenue Growth10.17%

EPS Growth8.01%

CountrySG

Employees33,656

SectorFinancial

Sector Strength75

IndustryBanks - Regional

Share Statistics

EPS (TTM)0.42

Shares Outstanding4,514,995,600

10 Day Avg. Volume4,685,740

30 Day Avg. Volume5,232,419

Financial Highlights & Ratios

PEG Ratio0.71

Price to Book (P/B)1.03

Price to Sales (P/S)0.00

P/FCF Ratio6.48

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$16.55

Price Target Upside3.53% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

OCBC Business Overview & Revenue Model

Company DescriptionOversea-Chinese Banking Corporation Limited (OCBC Bank), headquartered in Singapore, is one of the largest financial services groups in Southeast Asia. Established in 1932, the bank operates across various sectors including consumer banking, corporate banking, investment banking, private banking, insurance, asset management, and treasury services. OCBC Bank offers a comprehensive range of financial products and services to individuals, businesses, and institutions, with a significant presence in key markets such as Singapore, Malaysia, Indonesia, and Greater China.

How the Company Makes MoneyOCBC Bank generates revenue through multiple streams primarily associated with its banking and financial services operations. The bank earns interest income from its loan portfolio, which includes mortgages, personal loans, and corporate loans. Additionally, OCBC derives fee-based income from services such as wealth management, brokerage, and investment advisory. The bank also earns from trading and investment activities, including foreign exchange and securities trading. OCBC's insurance subsidiary, Great Eastern Holdings, contributes to revenue through the sale of life and general insurance products. Furthermore, the bank benefits from strategic partnerships and collaborations that enhance its product offerings and market reach, contributing to its overall earnings.

OCBC Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q3-2024)

% Change Since: -1.05%|

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 has delivered strong financial performance with significant revenue and net income growth. The balance sheet is robust with zero debt and a strong equity position. However, cash flow from operations has declined significantly, indicating potential challenges in cash generation.

Income Statement

Very Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Positive

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
16.74B	14.44B	13.44B	11.19B	10.49B	8.10B
	Gross Profit
16.61B	14.44B	13.44B	11.19B	10.49B	8.10B
	EBIT
7.91B	8.98B	8.40B	7.47B	5.68B	5.34B
	EBITDA
8.40B	9.50B	8.95B	7.20B	6.20B	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
0.00	57.28B	51.74B	61.65B	-7.65B	-7.44B
	Total Assets
602.01B	625.05B	581.42B	559.96B	542.19B	521.39B
	Total Debt
0.00	31.79B	26.77B	22.63B	29.78B	35.42B
	Net Debt
0.00	-20.97B	-22.85B	-39.02B	-20.30B	-22.02B
	Total Liabilities
602.01B	566.37B	525.87B	505.29B	489.05B	471.42B
	Stockholders Equity
57.63B	57.62B	52.92B	53.09B	51.47B	48.42B
Cash Flow		Free Cash Flow
-16.36B	3.35B	8.59B	8.45B	13.84B	15.25B
	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 Technical Analysis

Technical Analysis Sentiment

Negative

Last Price15.99

Price Trends

50DMA

15.90

Positive

100DMA

16.25

Negative

200DMA

15.79

Positive

Market Momentum

MACD

>-0.01

Positive

RSI

45.06

Neutral

STOCH

25.00

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SG:O39, the sentiment is Negative. The current price of 15.99 is below the 20-day moving average (MA) of 16.20, above the 50-day MA of 15.90, and above the 200-day MA of 15.79, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 45.06 is Neutral, neither overbought nor oversold. The STOCH value of 25.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SG:O39.

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
S68	79 Outperform	$15.20B	23.13	35.32%	2.56%	8.76%	15.45%
D05	78 Outperform	S$125.52B	11.22	17.99%	5.49%	13.03%	12.01%
O39	77 Outperform	$72.31B	9.62	13.78%	10.97%	10.17%	8.01%
S41	72 Outperform	S$1.13B	10.82	4.99%	5.98%	3.85%	11.43%
U11	69 Neutral	$58.29B	9.82	13.43%	6.72%	5.68%	5.92%
G07	66 Neutral	S$12.21B	12.27	12.01%	6.98%	23.83%	28.49%
Sector *	64 Neutral	$12.73B	9.77	7.84%	78.17%	12.05%	-7.99%

* Financial Sector Average

Performance Comparison

SG:O39

OCBC

15.99

2.74

20.69%

SG:G07

Great Eastern Holdings Limited

25.80

0.64

2.54%

SG:S41

Hong Leong Finance Limited

2.54

0.27

11.89%

SG:S68

Singapore Exchange

13.85

4.66

50.64%

SG:U11

UOB

34.71

6.01

20.94%

SG:D05

DBS Group Holdings

43.93

10.52

31.48%

OCBC Corporate Events

OCBC Prices EUR 500 Million Covered Bonds Due 2028

Apr 3, 2025

OCBC has successfully priced EUR 500 million in fixed rate covered bonds due in 2028 under its US$10 billion Global Covered Bond Programme. The bonds, which will bear an interest rate of 2.481% per annum, are expected to be rated Aaa by Moody’s and AAA by Fitch, and will be guaranteed by Red Sail Pte. Ltd. The issuance is set for April 2025, with plans for listing on the Singapore Exchange, potentially strengthening OCBC’s financial positioning and providing liquidity for general corporate purposes.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.