OCBC posted 1Q17 net earnings of S$973m, up 14% YoY and 23% QoQ, and higher than consensus of S$845m as polled by Bloomberg. Net Interest Income fell 3% YoY but was up 2% from last quarter to S$1272m. Non-interest Income grew 30% YoY and 5% QoQ to S$977m. This was buoyed by better insurance and fee income.

Total insurance income rose 73% YoY and 16% QoQ to S$211m. Fee Income rose 29% YoY and 15% QoQ to S$481m. Wealth Income surged 70% YoY and 37% QoQ to S$215m.

Net Interest Margin (NIM) eased from 1.75% in 1Q16 and 1.63% in 4Q16 to 1.62% in 1Q17. NPL ratio held steady at 1.3%, same as last quarter. Cost-to-income ratio also came off, falling from 45.1% in 4Q16 to 43.4% this quarter.

There are currently 9 BUYs, 8 HOLDs and 7 SELLs on OCBC with a 12-month target price of S$9.53 based on estimates from Bloomberg. OCBC closed trading yesterday at S$10.30.

Source: OCBC Research - 9 May 2017