OCBC loan growth poised to hit 7.9% in Q1

Strong corporate demand especially in real estate and hospitality industries are poised to drive growth.

OCBC is expected to clock in high single-digit loan growth of 7.9% YoY and 2.2% QoQ in Q1, according to UOB Kay Hian, as strong corporate demand from firms expanding into overseas markets with real estate and hospitality projects, are poised to buoy quarterly figures.

The bank can aslo cash in on the residential sector especially with new property launches and surge of en-bloc transactions.

Fee income is similarly expected to rise 4.6% YoY thanks to healthy growth in wealth management products, prompting the AUM under the segment to soon breach the $100b mark.

Here’s more from UOB Kay Hian: 

We expect NIM to expand 6bp yoy and 1bp qoq in 1Q18. The upward trend in NIM is supported by rising SIBOR and SOR, which are moving higher in tandem with successive hikes in the Fed funds rate. Management intends to gradually raise its loan-to-deposit ratio (LDR) at 83.5% as of Dec 17, which will support a firmer NIM.

Surging forward with headwinds from O&G already behind us. We forecast OCBC’s net profit at S$1,067m for 1Q18, up 9.7% yoy and 3.3% qoq. Credit costs should normalise downwards to levels prior to the crisis from the O&G sector. 

Asset quality stabilised after weathering headwinds from oil & gas (O&G). We expect NPL formation to be benign and NPL ratio to be stable at 1.43%. Credit costs are expected to have moderated to 22.3bp in 1Q18, from 30.3bp last year.