UOBKayhian on 2 May 2014
FY14F PE (x): 10.6
FY15F PE (x): 10.1
Net profit at S$899m was way above our forecast of S$732m. Significant margin
expansion. Loans expanded 18% yoy and 3.3% qoq. Loan growth was driven by
overseas market, such as Malaysia +5%, Indonesia +7.3% and Greater China +8.6%.
Net interest margin expanded by a significant 6bps qoq to 1.70% due to improved
spread loans and higher yield from interbank loans in China. Net interest income
increased by a hefty 19.2% yoy. Maintain BUY. Our target price of S$11.14 is based
on the conservative assumption that OCBC raised equity capital of S$5,770m to bring
fully loaded CET-1 CAR on a post- acquisition basis from 7.4% to 10.5%.
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