What’s next for OCBC shares?

• Oversea-Chinese Banking Corp Ltd (SGX: O39) share price rose to a high of S$12.12 on Monday (7 November 2022)
• The bank’s Q3 net profit exceeded analysts’ predictions
• Analysts foresee a 17% price upside for the stock in the next 12 months
• Keen to trade OCBC shares? Start today with an IG account.

OCBC stock price target: what’s the latest?

OCBC’s share price rose nearly 2% after the release of its latest quarterly results.

Shares of Singapore’s second largest lender has rallied 5.5% in 2022.

As of 7 November 2022, the banking stock has a consensus rating of ‘outperform’ and an average price target of S$14.08 a share. The price target implies a 16.8% upside potential from OCBC’s last traded price of S$12.06.

UOB’s equity research team rated OCBC shares a ‘buy’ on 25 October, while lifting their price target to S$16.82 from S$16.18.

Meanwhile, DBS analysts kept a ‘buy’ call and a share price target of S$15 in a recent investor note.

How did OCBC fare in Q3 2022?

The group’s net profit rose 31% year-on-year from S$1.22 billion in Q3 2021 to S$1.6 billion during the same period this year.

This exceeded UOB analysts’ profit prediction of S$1.42 billion.

Quarterly net interest income surpassed S$2 billion for the first time, rising 44% to S$2.1 billion on the back of a 6% growth in average asset balances and net interest margin (NIM) expansion.

Amid a rising interest rate environment, NIM rose 54 basis points from Q3 2021 to 2.06%. Non-interest income of S$1.05 billion was 4% below the previous year.

Operating expenses grew 7% to S$1.27 billion, led by a rise in staff costs associated with headcount growth to support business expansion as well as from annual salary increments. The cost-to-income ratio improved 6.1 percentage points to 40.3% as income growth outpaced the increase in operating expenses.

Finally, the group’s annualised return on equity was 12.4%, up from 9.5% a year ago.

Looking ahead, Group CEO Helen Wong said that while ‘the global economic outlook is expected to be increasingly challenging’, the bank is ‘well-positioned’ to ‘capture opportunities as they arise’.

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