SINGAPORE (Oct 25): DBS Group Research is keeping its “buy” call on Oversea-Chinese Banking Corporation (OCBC) with an unchanged target price of $12.80.

This come after OCBC’s insurance subsidiary Great Eastern Holdings (GEH) on Wednesday reported earnings of $235.5 million for the 3Q17 ended September, up 21% from $195 million a year ago.

Total Weighted New Sales (TWNS) increased 16% to $306.3 million from $264.7 million a year ago but New Business Embedded Value (NBEV) fell 10% to $116.7 million from $129.4 million.

Gross premiums for 3Q17 increased 33% to $3.1 billion, from $2.3 billion a year ago.

See: Great Eastern reports 21% rise in 3Q earnings to $236 mil

“OCBC’s key differentiating factor lies in its insurance business which gives it a more holistic wealth management platform, which we believe is still under-appreciated by the market,” says DBS analyst Lim Sue Lin in a flash note on Wednesday.

The bank is due to release its 3Q17 results this Thursday before market opens. Lim opines that, like GEH’s results, OCBC’s non-interest income should be decent.

“Although insurance income contribution would likely be lower q-o-q, this would be offset by the improved wealth management business during the quarter, which we understand, should remain strong,” Lim says.

Meanwhile, the analyst notes that GEH is reported to have engaged at least one Malaysian bank to explore selling its stake in its Malaysian operations.

This is in reaction to Bank Negara Malaysia’s stricter enforcement of the 70% foreign ownership cap on insurers, which was issued back in 2009.

As at 4.22pm, shares in OCBC are trading 5 cents higher at $11.51, implying an estimated price-to-book value of 1.2 times and dividend yield of 3.2% for FY17.