Towards Financial Freedom
OCBC - Soft NIM and weak non-interest income
Sequentially softer earnings due to weakness in life assurance and trading income. OCBC reported 2Q12 net profit of S$648m, up 12% YoY but down 22% QoQ. This is close to our S$630m forecast. Contributing to the sequentially weaker net profit was a 25% plunge in non-interest income, attributed to 1) life assurance profitplunging 68% QoQ, and 2) net trading income collapsing 54% sequentially. This was partly offset by loan allowances plunging 61% QoQ. The slow loan growth and narrow NIM are also not positives. We see no catalyst driving OCBC share price further up, and maintain our NEUTRAL recommendation with a raised target price of S$8.60, pegged to 1.3x 2012F book.
Both loans growth and NIM were unexciting. Loans expanded 2.8% sequentially, following 1Q12's 0.4% QoQ contraction. There is a marked slowdown in loan growth (compared with 2Q11's 9.4% sequential expansion). The 1.77% NIM was 9 bps narrower QoQ, with Malaysia and Indonesia NIMs squeezed by 20 & 33 bps QoQ respectively. Management guided FY12 loan expansion of high single-digit (we forecast 9%) and continued NIM pressure (we forecast FY12 NIM of 1.79%).
An interim dividend of 16S'' has been declared. The Script Dividend Scheme will not be applicable. The interim dividend payout of S$550m represents a 38% payout ratio of core net profit.
We raised our FY12 net profit forecastby 49% (or S$1.25b) to factor in 1) S$1.15b post-tax gain from sale of F&N and APB shares by both OCBC & GEH; 2) reduction in provisioning expectations by 21% to reflect the lower-than-expected 1H12 provisions.
Source: OSK
Both loans growth and NIM were unexciting. Loans expanded 2.8% sequentially, following 1Q12's 0.4% QoQ contraction. There is a marked slowdown in loan growth (compared with 2Q11's 9.4% sequential expansion). The 1.77% NIM was 9 bps narrower QoQ, with Malaysia and Indonesia NIMs squeezed by 20 & 33 bps QoQ respectively. Management guided FY12 loan expansion of high single-digit (we forecast 9%) and continued NIM pressure (we forecast FY12 NIM of 1.79%).
An interim dividend of 16S'' has been declared. The Script Dividend Scheme will not be applicable. The interim dividend payout of S$550m represents a 38% payout ratio of core net profit.
We raised our FY12 net profit forecastby 49% (or S$1.25b) to factor in 1) S$1.15b post-tax gain from sale of F&N and APB shares by both OCBC & GEH; 2) reduction in provisioning expectations by 21% to reflect the lower-than-expected 1H12 provisions.
Source: OSK
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CS Tan
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
