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Rough year ahead for this banking stock

Gwyneth Yeo
Gwyneth Yeo1/12/2017 09:18 AM GMT+08  • 2 min read
Rough year ahead for this banking stock
SINGAPORE (Jan 12): Oversea-Chinese Banking Corporation could have a rough year ahead of it, and Maybank Kim Eng is maintaining its “sell” rating on the local bank.
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SINGAPORE (Jan 12): Oversea-Chinese Banking Corporation could have a rough year ahead of it, and Maybank Kim Eng is maintaining its “sell” rating on the local bank.

Maybank’s analyst Ng Li Hiang noted that credit spreads have not widened and OCBC would be less likely to benefit from the higher risks in the lending environment. By Maybank’s estimates, a 0.2 percentage point increase in credit spreads should be able to raise OCBC’s net interest margins by 0.022%.

As it stands, the banks’ unwillingness to undertake higher risks coupled with weak loan demand has already caused its loan growth to stagnate, after excluding the fluctuations in currency. In contrast, DBS Bank’s loan growth rose 5% and United Overseas Bank’s loan growth rose 7.3% over the same period in constant currency terms.

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