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Investors were let down by OCBC’s recent earnings report. Is it really that bad?
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Investors were let down by OCBC Bank(O39.SG) recent earnings report, causing the bank's stock price to drop. Let's explore why:
Profits Missed the Mark: While OCBC Bank(O39.SG profit grew 12% to $1.62 billion in Q4 2023, it fell short of the $1.71 billion analysts expected. This weakness stemmed from lower non-interest income, especially in insurance.
Falling Non-Interest Income: OCBC’s non-interest income dipped to $811 million due to a decline in Life & General Insurance income, impacting profitability and disappointing investors.
Cautious Future Outlook: OCBC anticipates slower global growth, persistent inflation, and falling interest rates in 2024, potentially harming its performance. The bank forecasts a slightly lower net interest margin (2.20% – 2.25%) and a return on equity (ROE) of 13% – 14%, aiming to maintain a 50% dividend payout ratio.
Dividend announced:
OCBC announced a final dividend of $0.42 per share on February 28, 2024, bringing the total dividend for 2023 to $0.82 per share. This represents a 21% increase compared to the previous year’s $0.68 per share dividend. The bank paid out 53% of its FY2023 net profit of $7.02 billion in dividends.
OCBC announced a final dividend of $0.42 per share on February 28, 2024, bringing the total dividend for 2023 to $0.82 per share. This represents a 21% increase compared to the previous year’s $0.68 per share dividend. The bank paid out 53% of its FY2023 net profit of $7.02 billion in dividends.
Technical views:
1. The price peak of $13.45 was accompanied by weakening momentum, as evidenced by the bearish divergence in MACD
2. Today’s price drop was accompanied by an increase in volume, suggesting that sellers are more willing to sell at lower prices.
3. Support is expected around $12.60 for this price movement.
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