OCBC 360 updated (and downgraded) again.

Once upon a time, OCBC 360 together with the OCBC Frank credit card, was my favourite combination to get higher interest income on my savings.

I just had to spend $400 with my Frank card and pay 3 bills online and I would get a 2% interest rate on my savings. With no monthly salary to credit into the account, that was the best I could do.




Then, the benefits were revised and suddenly my interest income, everything else remaining the same, halved! 

So, I junked the combo and cancelled the Frank card.

Now, this doesn't mean that the OCBC 360 is not good for others, especially those who have a monthly salary to credit into the account.

However, with the latest revisions, it is probably not as good as before.

The impression I get is that OCBC wants us to save more but is paying us less to do so.

Forget about the "Wealth" and "Save" boxes. "Salary", "Payment" and "Spend" are what most people hit.

So, after the revision, we would receive 1.8% in bonus interest whereas we were receiving 2.2% before.

Of course, the original OCBC 360 would have paid 3.0% for the same 3 conditions!

3.0% to 2.2% to 1.8%.

Alamak and I thought interest rates are rising. I must be growing old and senile.




Of course, for people without a monthly salary to credit, it would have reduced from 2% to 1% to 0.6%. This is after meeting two conditions too. Duh!

Most of my savings is with CIMB Star Saver now because they pay 0.8% up to the first $750K. 

I don't have to use their cards or pay bills online to be paid 0.8%.




If OCBC wants me to save more with them, they should make it easier and more rewarding for me to do so.

Related posts:
1. UOB ONE or OCBC 360 (plus BOC)?
2. My savings accounts and money flow...

How much is QAF Limited worth using DCF?

Warren Buffett on Interest Rates & Valuations.

Many people ask me what is a fair price for QAF Limited. Obviously, all of us will have our own answer.

Of course, depending on Mr. Market's mood, share price could go higher or lower. There is no accounting for prices or so I have heard people say.

What we can try to find out is the intrinsic value to help us make sense of the price offered by Mr. Market. After all, price is what we pay and value is what we get.

I decided to play around with some numbers to see what QAF Limited's intrinsic value should be using Discounted Cash Flow (DCF), a process which is made much easier using an online calculator I found: 
http://www.moneychimp.com/articles/valuation/dcf.htm

I will try to be more conservative because I don't know all there is to know. Instead of entering earnings per share (EPS) as 10.9c, I will enter 10c.

In scenario 1, to be even more conservative, I assume zero growth in QAF Limited's earnings and a risk free rate of 3% which is a bit higher than what is offered by a 30 years bond issued by the Singapore Government now. The risk free rate is what I am going to use as the discount rate for DCF calculation.

Stock value per share: $3.33

In scenario 2, to be even more conservative, I assume a higher interest rate environment with a risk free rate of 5%. Again, I assume zero growth in QAF Limited's earnings.

Stock value per share: $2.00

In scenario 3, to be more realistic, I will assume some growth in earnings. After all, QAF Limited's EPS has grown over the last few years. I will use a risk free rate of 5% in this scenario for that conservative element.

Stock value per share: $2.50.

Now, is QAF Limited's fair value at least $2.00 a share? You blur? Don't look at me. I am only a blogger. What do I know?

Read more about DCF: HERE.

Related post:
What is QAF Limited really worth?