Oversea-Chinese Banking Corp (OCBC)

Can Singapore banks fend off new challengers as city-state grants digital bank licences?

SINGAPORE (July 4): DBS Group Holdings (DBS), Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB) have enjoyed a decades-long dominance of the banking market in Singapore.

But a decision by the central bank to grant up to five digital bank licenses to non-bank players is about to shake up the market.

The Monetary Authority of Singapore (MAS) last week announced it will grant as many as two digital full-bank (DFB) licenses and up to three digital wholesale bank (DWB) licenses.

Virtual banks not a threat to Singapore banks – for now, says CGS-CIMB

SINGAPORE (June 20): The Monetary Authority of Singapore (MAS) is studying the potential for opening the doors to “digital-only banks with non-bank parentage”.

But CGS-CIMB Research dismisses fears that such virtual banks on could put a dent in the market share of incumbents DBS Group Holdings (DBS), Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB) – at least for now.

“We think that virtual banks are not likely to threaten the primary lending businesses of DBS, OCBC and UOB in the near term,” says lead analyst Andrea Choong in a report on Wednesday.

Maybank picks UOB and DBS as banks respond to dips with buybacks

SINGAPORE (June 17): Singapore banks have accelerated their share buyback programmes after being de-rated 12% since their peak in April due.

The de-rating was due to profit-taking, slowing Singapore economic growth and escalating US-China trade tensions.

“We believe this is an indicator of emerging value,” says analyst Thilan Wickramasinghe in a Friday report.

Following its recent correction, the sector is trading at a 17% FY19E P/E discount to its Asean banking peers. Yet, the banks are offering 149bp higher dividend yields.

Grab eyes Singapore banking licence as regulator studies virtual banks

(June 12): Grab, Southeast Asia’s most valuable startup, is exploring a move into Singapore banking as regulators in the Southeast Asian city-state consider allowing online-only banks, four people with knowledge of the process said.

Grab is close to hiring a consultancy to advise it on its banking potential and is gearing up to apply for a digital-only bank license in Singapore if the banking regulator decides to open up the sector, said the people, who declined to be identified as they were not authorised to speak to the media.

US Fed hints at rate cut; multi-front trade tensions escalate

SINGAPORE (June 10): As trade disputes between the US and its trading partners worsen, there are widespread expectations in the market that the US Federal Reserve could cut interest rates. “We do not know how or when these issues will be resolved,” said Fed chairman Jerome Powell on June 4, referring to multi-front trade disputes from China to Mexico to India.

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Banks can still pay dividends despite a more uncertain macro outlook

SINGAPORE (May 27): Excluding real estate investment trusts, the local banks are probably the safest dividend plays for now. This is despite growing geopolitical and economic uncertainties. In the short term, rising trade tensions and the increasing probability of slower global and US growth could weigh on their share prices.

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Outlook for OCBC appears mixed to analysts

SINGAPORE (May 13): UOB KayHian is maintaining Oversea-Chinese Banking Corp (OCBC) at “buy” with a target price of $14.62 based on 1.42 times FY19F book.

See: OCBC reports 11% rise in 1Q19 earnings of $1.23 bil on strong income growth

“We raised our earnings forecast for 2019 by 2.2% after factoring in the better-than-expected results for 1Q19,” says OCBC analyst Jonathan Koh.

Singapore says it's studying whether to allow digital-only banks

(May 7): Singapore is discussing the possibility of allowing virtual banks to operate in the city state, the Monetary Authority of Singapore said Tuesday.

“MAS is studying whether to admit such digital-only banks with non-bank parentage,” the financial regulator said in an emailed reply to questions from Bloomberg News. “We have been engaging relevant stakeholders to ascertain the unique value that such entrants could bring to our banking landscape, and understand how potential risks will be managed and contained.”

Forgers are forcing a US$9 tril business into the digital age

(May 6): The US$9 trillion ($12.3 trillion) business of financing global trade needs to go digital, according to southeast Asia’s second-biggest lender.

Forgers have become so adept at faking documents used by banks that going paperless has become a necessity for the industry, said Ng Chuey Peng, managing director and head of global commodities finance at Singapore’s Oversea-Chinese Banking Corp, the region’s second-biggest bank by assets. Digitalisation will also make the financing process more efficient, she said.

Fairly valued OCBC kept at 'neutral' by RHB with $12.20 target

SINGAPORE (Apr 23): RHB Research is maintaining Oversea-Chinese Banking Corp (OCBC) at “neutral” saying the stock is fairly valued.

In addition, OCBC’s 1Q19 non-interest income is expected to be “uninteresting”, given high 1Q18 base would make it challenging for 1Q19 to show growth.

And although NIM is expected to widen this year, RHB expects this to be narrower than peers.

“Prefer UOB and DBS,” says RHB.

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