Thursday, February 29, 2024

OCBC Group FY2023 Earning Result

OCBC Group ("OCBC") reported their FY2023 earning result yesterday [here].  Here is a quick dive into the numbers:

Numbers in S$ million unless stated otherwise.
Full Year Ending 31 Dec 2023 31 Dec 2022 % Change
Total Income 13,507 11,286 19.7
Profit Before Tax 8,401 6,670 26.0
Net Profit 7,165 5,639 27.1
EPS (S$) 1.55 1.22 27.0
DPS (S$) 0.82 0.68 20.6

OCBC's FY2023 NII was S$9.65B (FY22: S$7.69B), up 25.5% y/y, attributed to asset growth and a higher NIM of 2.28% (FY22: 1.91%).  Non-interest income was S$3.86B (FY22: S$3.60B), up 7.3% y/y, attributed to higher trading income of S$1.00B (FY22: S$929M) and higher investment gains.  Insurance income from Great Eastern Holdings was comparable at S$808M (FY22: S$803M).  Wealth management income improved to S$4332B (FY22: S$3.42B).  FY2023 net profit hit record S$7.02B (FY22: S$5.53B), up 27.1% y/y,

FY2023 operating expenses was S$5.22B (FY22: S$4.83B), up 8.0% y/y due to higher staff cost, IT-related costs and other operational expenses.  Non-performing assets stood at S$2.90B as at 31 Dec 2023, down 16.8% y/y.  NPL ratio is 1.0% as at 31 Dec 2023 (31 Dec 2022: 1.2%).  FY2023 allowances increased to S$733M (FY22: S$584M).  FY2023 ROE improved to 13.7% (FY22: 11.1%).

OCBC CEO Helen Wong highlighted the strategic acquisitions of AmMetLife Insurance and AmMetLife Takaful in Malaysia and PT Bank Commonwealth in Indonesia to accelerate OCBC's growth in ASEAN, pending regulatory approvals.  FY2024 loan growth is expected to be low single digit (similar to UOB).

The Board declared a final dividend of 42 cents per share, going Ex Date: 8 May 2024.

My Thoughts
Welcome to the wacky world of equity investing.  OCBC achieved record revenue and net profit, but the stock got sold down because of missed analysts' 4Q2023 EPS expectations (actual: S$0.357, street: S$0.386).  Even a higher final dividend failed to whet the appetite of investors.  Nonetheless, OCBC still managed to clock in a respectful performance.  OCBC forecasts FY2024 NIM to be in the range of 2.00% to 2.25%, just slightly lower compared to FY2023.   Will continue to monitor the stock price and accumulate on opportunity.

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