Singapore’s Oversea-Chinese Banking Corp (OCBC) reported a better-than-expected 5% rise in first-quarter profit, surpassing market expectations. The bank’s net interest margin for the quarter slightly declined to 2.27% from 2.30% a year earlier. However, OCBC remains optimistic about its full-year forecast, expecting its net interest margin to be at the higher end of a 2.20% to 2.25% range.
Offer to Take Great Eastern Private
In addition to its strong financial performance, OCBC made a significant move by offering to take its insurer arm Great Eastern private. As Great Eastern’s largest shareholder, OCBC proposed a S$1.4 billion offer to acquire the 11.56% stake in the insurer that it does not already own. This offer represents a 37% premium over Great Eastern’s last traded share price, valuing the insurer at S$12.12 billion. If the deal is successful, OCBC plans to delist Great Eastern from the Singapore bourse.
During a briefing with analysts and reporters, OCBC’s Group CEO Helen Wong addressed speculation surrounding her potential candidacy for the HSBC CEO role. Wong clarified that she is not available for the job, putting an end to rumors linking her to the position. Despite her previous experience at HSBC, Wong remains committed to her current role at OCBC.
OCBC’s strong performance in the first quarter aligns with the overall positive trend seen in Singapore’s banking sector. Major banks, including DBS Group and United Overseas Bank (UOB), have also reported better-than-expected earnings for the same period. The city-state’s banking industry has benefited from robust inflows from wealthy clients in Asia, Europe, and the Americas, driven by Singapore’s political stability.
Looking ahead, OCBC maintains its 2024 targets of low single-digit loan growth, credit costs between 20 to 25 basis points, and a 50% dividend payout ratio. Despite some near-term risks, such as geopolitical volatility and ongoing global uncertainties, OCBC remains confident in its ability to navigate challenges and deliver sustainable growth.
OCBC’s impressive first-quarter performance and strategic move to acquire Great Eastern demonstrate the bank’s commitment to long-term value creation and expansion. By outperforming market expectations and maintaining a strong financial position, OCBC sets a positive trajectory for future growth and stability in Singapore’s banking industry.