OCBC share price to increase three-fold in decade?

Looking back, OCBC share price had risen more than two-fold since 2009. But a series of unfortunate events had combined to knock the wind out of OCBC share price. Will the coronavirus prolong the suffering of investors? In my frank opinion, whilst there are significant challenges in the short-term, the long-term outlook for OCBC is still good.

As a bank stock, I have always maintained that OCBC share price is volatile even in peace times. So it is important for investors to set an entry and exit price. Previously, I have shared that I entered this counter at $11.00. Obviously with the onset of the virus, OCBC share price had turned bearish. But I am not losing sleep because I am convinced that I am investing in a great piece of business at a reasonable market price.

OCBC share price

On 21 February 2020, the management released a set of excellent results for full year 2019. Net profit rose to a record of $4.87 billion. Net interest income increased 7% to a new high of $6.33 billion while net interest margin (NIM) rose to 1.77%. Return on equity (“ROE”) of 11.4% for FY19 was marginally below 11.5% in FY18. The slight drop in ROE was due to the enlarged share capital base.

To celebrate the stellar result, the management is proposing a final tax-exempt dividend of 28 cents per share, representing a 22% increase from the final dividend of 23 cents a year ago. Indeed, 2019 had been a challenging year which saw the bank hit by the impact of Singapore property cooling measures, Hong Kong riots and US Federal Reserves cutting interest rates three times. Somehow, OCBC share price had remained resilient in 2019 but was a shadow of its former self in 2018.

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Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. In addition, I am vested in this counter (holding 1300 OCBC shares at $11.00).

OCBC share price prime for upturn with trident business units

Despite the challenging 2019, OCBC share price weathered the storm because of its strong core banking, wealth management and insurance businesses. These “trident business units” provides the competitive edge for OCBC.

Net profits for banking operations had seen a year-on-year increase of 4% to reach $4.03 billion. Over the years, OCBC had made pretty much in-road into overseas markets. It’s regional banks consist of OCBC Wing Hang, OCBC Malaysia and OCBC NISP. It appears to me that [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: March 24, 2020 — 1:28 pm

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