Analyst Note| Michael Wu, CAIA |
Oversea-Chinese Banking Corporation's first-quarter net profit was SGD 1.5 billion, compared with SGD 698 million the same period last year and SGD 1.1 billion last quarter. Similar to peers, this was driven by higher fee and trading income but for OCBC, the increase in net profit was also supported by higher insurance income. Total income was 17% higher against the same period last year at SGD 2.9 billion. Excluding the insurance operation, total income was largely steady at SGD 2.3 billion. As expected, the credit cost was lower with the expected credit loss, or ECL, at SGD 161 million this quarter, compared with SGD 657 million last year. Our fair value estimate is increased slightly to SGD 13 from SGD 12.50 per share. There is no change in the overall strategy with the new CEO Helen Wong reiterating the bank’s focus on banking, wealth management and insurance. However, improvements are expected within each of the above operations and across geographies. Digitalisation remains a focus for the group.