OCBC

OCBC: 4Q11 results slightly above Bloomberg consensus estimates.
Net profit rise 18% yoy to $594m, mainly due to higher net-interest income arising from strong loan growth.
Net interest income climbed 20% yoy and 6% qoq, to $925m, driven by robust loan growth (+27% yoy) which offset lower net interest margin (1.85% stable qoq, down from 1.96% yoy).
Non-interest income rose 2% to $572m on higher trading income and gains from sale of invmt securities.
Operating expenses were flat at $620m, while cost to income ratio improved to 41.4% from 46.6% in both 3Q11 and 4Q10.
Asset quality remained healthy, though NPL ratio increased from 0.7% to 0.9% qoq in 4Q11, after a comprehensive portfolio review conducted in anticipation of an economic slowdown in 2012.
Tier 1 CAR improved from 12.5% in FY10 to 14.4%, and remained well above the regulatory min of 6%.
On outlook, mgt said it is mindful of the current economic slowdown driven by concerns over sovereign debt in Europe and sluggish recovery in the U.S., but will continue to invest in its regional network, and to leverage synergies across the Group.
OCBC declared a final div of 15cts, bringing total FY11 div to 30cts, in line with the div policy targeting a min payout of 45% of core earnings. This translates to a yield of 3.4% on the counter’s last close at $8.85.
OCBC trades at 1.26x P/B on FY11 ROE of 11.1%.