OCBC Earnings: 4Q Net Income Misses Estimates Despite 12% Yearly Increase

OCBC‘s Q4 net income rose by 12% year-on-year (y/y) to S$1.62 billion, but missed the estimated S$1.71 billion.

Net interest income increased by 3.2% y/y to S$2.46 billion.

Non-interest income saw a significant rise of 26% y/y to S$811 million.

Total income grew by 7.9% y/y to S$3.27 billion, falling short of the estimated S$3.39 billion.

Wealth management fees surged by 40% y/y to S$195 million.

The ratio of non-performing loans dropped from 1.2% to 1% y/y.

The common equity tier 1 ratio went up to 15.9% from 15.2% y/y.

Total capital adequacy ratio increased to 18.1% from 17.7% y/y.

Tier 1 ratio rose to 16.5% from 15.9% y/y.

Net interest margin decreased slightly to 2.29% from 2.31% y/y.

Allowances for loans and other assets reduced to S$187 million from S$314 million y/y.

For the year 2023, OCBC‘s net income was S$7.02 billion, a rise of 27% y/y, but missed the estimate of S$7.12 billion.

The final dividend per share for 2023 was S$0.42, up from S$0.40 y/y.

For the year 2024, OCBC anticipates a return on equity (ROE) between 13% to 14%, and a net interest margin (NIM) in the range of 2.20% to 2.25%.

The bank expects low single-digit loan growth and credit costs between 20 to 25 basis points in 2024.

OCBC plans to maintain a 50% dividend payout ratio target in 2024.

OCBC predicts a global growth slowdown in 2024 but expects Asia to perform better.

Interest rates are likely to trend downwards from the second half of 2024.

Global inflation is expected to remain sticky in the near term.

Loans to the commercial real estate (CRE) office sector make up 12% of OCBC‘s group loans, with two-thirds in key markets of Singapore, Malaysia, Indonesia, and Greater China.

OCBC has expanded its Greater China Business Offices network in ASEAN with a new branch in Central China.