Has OCBC share price peaked? After hitting a 5-year high of $13.30 on 31 July 2023, OCBC share price declined to $12.30 as at 18 August 2023. Year-to-date, OCBC share price remains flat despite the bank delivering good financial result on the back of the interest rate hikes. What could be the reasons for the sterile form of OCBC share price?
On 4 August 2023, investors got a rude shock as OCBC announced a net profit of just $1.71 billion for 2QFY2023. On a quarter-to-quarter basis, this represented a 9% decline. Among the three banks, OCBC Bank fared the worst as DBS’ net profit increased 2% while UOB declined by 6%. The weak result of OCBC’s 2QFY2023 was glossed over by the interim dividend, which was raised to $0.40, up 43% year-on-year.
OCBC attributed the second quarter income decline to higher allowances. Total allowances for 2QFY2023 were $252 million, up from $110 million in 1QFY2023. Among its non-performing assets, the largest amount came from Greater China ($829 million). Given the recent bankruptcy filed by Evergrande, investors could be concerned by OCBC’s exposure to the ailing Chinese real estate property sector. Hence, the current bearish form of OCBC share price.
According to the latest financial result, the amount of loan exposure to Greater China stood at $73 billion as at June 2023.Read more