OCBC

OCBC: 1Q results largely in line.
Net profit was $628m, -7% yoy, but slightly higher than the $604m tipped by consensus. The bottom line was supported by $32m divestment gain from the sale of a Singapore property, without which, net profit would be 12% lower.
The net profit decline came on the back of lower non-interest income, depressed net interest margins and increasing staff costs although its loans business remained the best performing in the sector...

Specifically,
i) net interest income grew 11% yoy, driven by gross loans growth of 23% while NIM remains depressed at 1.9%. This is the best yoy performance among the three banks.
ii) fee-based income grew 23% yoy, driven by wealth mgt.
iii) Insurance income rebounded from last quarter's poor showing from its insurance funds
iv) ROE of 12.2%, with NPL remaining stable at 0.9%, still the lowest amongst the three banks...

Mgt notes the strong economic growth in key markets and growing of regional customer franchise underpinned this qtr’s performance. Says while inflationary pressures persist, the business outlook continues to be positive for the year.
Stock trades at 1.6x P/B.
Pre-results, the majority of Street had Buy ratings with recent TP btwn $10 – 11.80.