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OCBC ups dividend by 5%! $7 billion net profit!

Wednesday, February 28, 2024

OCBC has declared a dividend of 42 cents per share, up from 40c a year ago.

This represents a 5% increase which makes me happy.

Full year dividend per share is, therefore, 84c.

This is an increase of some 21% from a year ago.

Payout ratio is about 53% of net profit.

The stellar results of 2023 was driven mainly by higher net interest margins across all its markets.

Net profit was in excess of $7 billion, up 27% from a year ago.

I like that OCBC has continued to drive costs lower with a lower cost to income ratio of 38.7%.

For people who are worried about OCBC's exposure to China, I have said before that they anticipated the problems early on like DBS and limited their exposure to the troubled property sector.

Their NPL ratio is at a very manageable 1.0%.

OCBC, like DBS and UOB, is well capitalized and well managed.

Even as net interest margins come under pressure, OCBC is expected to perform relatively well and should continue to pay attractive dividends.

This is especially when the current 53% payout is pretty undemanding.

In terms of valuation, OCBC is similar to UOB in that it trades at 1.1x book value, has a PE ratio of around 8x but it has a more attractive dividend yield of some 6.2%.

The last time I bought more of OCBC's common stock was in the middle of last year at between $12 to $12.30 a share.

In a recent YouTube video I produced, I said that immediate support has moved higher to $12.60 a share.

This has likely moved higher again to $12.90 a share which is where we find the rising 50 days moving average.

As OCBC is already my largest investment, I am in no hurry to add to my position.

If I have yet to initiate a position, I would buy some on a possible pullback in stock price to under $13 a share.

Just to get a foot in the door and not throwing in everything including the kitchen sink.

If AK can do it, so can you!


keng said...

Hi AK,

Wow, you are so zhun! Sub $13 already. Hope to get in at a even better price. Adding slowly for my 7 year old kid.

Elaine said...

Hi AK!! Sharing your joy of the 3 banks' good results!

A friend recently sold out if her ST Engineering shares and is looking to get her foot into the local banks. She asked what would EK do.... but i think what would AK do is more credible. Ha!

If AK has zero exposure to the local banks, which would you buy today?

PS EK's vote go to DBS. :-)


AK71 said...

Hi keng,

Not I zhun.

The charts zhun.

Well, when they are not trolling us. ;p

AK71 said...

Hi Elaine,


Don't ask me this type of questions.

Stress! ;p

Honestly, I would split the funds into 3 equal portions and invest in all 3 banks to reduce concentration risk. :)

Elaine said...

Thank you, AK!! Please continue to talk to yourself!

Betta man said...

Hi AK,

Would you comment on the latest I-Reits global results ?

Desmond said...

With the interest rates still hanging high and no clear sign of a rate cut, I see that the SG Reit index has fallen significantly. Ireit is now at 0.35, possibly revisiting its Nov 23 low .....Pretty the same scenario for other Reits I see on the chart. Like to hear your views , I think it may be too premature to enter now from chart point of view, maybe wait for June to see if rates cut first.

SgFire said...

Hi Ak

Cdg div has increased to 4.8%

AK71 said...

Hi Elaine,

As long as AK remains mental, he will talk to himself. ;p

AK71 said...

Hi Betta man,

Nothing unexpected.

Strong balance sheet as the business chugs along.

You might want to watch this video again:
This REIT is a "MUST BUY" but only at a 9% distribution yield.

AK71 said...

Hi Desmond,

I am not adding to my positions.

However, for people who have been waiting on the sides forever and getting impatient, nibbling at immediate supports is probably something they can do. ;)

AK71 said...

Hi SgFire,

Huat ah! :D

Wisely said...

Hi AK,
Try listening to your youtube channel but to the max volume still quite soft.Is it possible to increase your mic volume in the youtube channel when you speak?

AK71 said...

Hi Wisely,

I listened to the videos using my tablet and also mobile phone, the volume is OK.

Not very soft to me.


nch said...

Hi AK,

Hope you are doing well. Qns about iReits Global, their aggregate leverage went up to 37.9% from 32% due to the decline in valuation in portoflio.

In a way, this means that they have a less leeway to borrow and purchase into new assets.

In general, what would happen to a reit if due to the decline in valuation, it breachs the limit % set by MAS?


AK71 said...

Hi nch,

This is why investing in REITs with low gearing to begin with is an important consideration.

IREIT Global has a lot of headroom even now before it hits 50% gearing level.

For an example of what happens if the limit is exceeded, look at Manulife US REIT. ;p

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