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As Forrest Grump says: ?Stupid is as stupid does?.
moonsun ( Date: 27-Feb-2025 10:58) Posted:
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Wong disagreed that the lender was lowering its dividends. Even though ordinary dividends for Q4 are down year on year, the final payout ratio of 60 per cent is higher than last year&rsquo s final payout of 53 per cent.
Disagreed but facts show?
Dun give confidence in her words..
Disagreed but facts show?
Dun give confidence in her words..
OCBC conservative about FY2025 targets amid trade tensions, uncertainties
Bank&rsquo s Q4 net profit is up 4% at S$1.7 billion, while full-year earnings rise 8% to a record S$7.6 billion
AFTER riding macroeconomic tailwinds to reach record earnings for 2024, OCBC&rsquo s management is staying cautious about the year ahead.
Notably, OCBC is maintaining a conservative view of three rate cuts for 2025 &ndash compared with its peers&rsquo expectations of one or two cuts for the year. It believes the volatile environment and heightened trade tensions could impede global growth even as Asean economies remain resilient.
For the financial year 2025, the lender is targeting a net interest margin (NIM) of around 2 per cent and mid-single-digit loan growth.
It also expects a cost-to-income ratio in the low 40 per cent range and credit costs of around 20 to 25 basis points.
&ldquo There&rsquo s always an upside, but we want to always follow prudence in our planning,&rdquo said OCBC chief executive Helen Wong, at the lender&rsquo s fourth-quarter results briefing on Wednesday (Feb 26).
OCBC posted a net profit of S$1.7 billion for Q4 ended Dec 31, 2024, up 4 per cent from S$1.6 billion in the previous corresponding period.
The earnings fell short of the S$1.8 billion consensus forecast in a Bloomberg survey of five analysts.
Net interest income for the quarter was stable at S$2.5 billion, as a 6 per cent increase in average assets mitigated the contraction in NIM.
NIM for Q4 stood at 2.15 per cent, down from 2.29 per cent in Q4 2023, and 2.18 per cent in Q3 2024. This was a result of loan yields tightening at a faster pace than the fall in deposit costs, amid US rate cuts in the second half of 2024.
The earnings fell short of the S$1.78 billion consensus forecast in a Bloomberg survey of five analysts.
OCBC misses estimates with Q4 earnings of S$1.69 billion unveils S$2.5 billion capital return plan
Meanwhile, non-interest income rose 18 per cent year on year to S$961 million from S$811 million, boosted by improved fee, trading and insurance income.
For FY2024, OCBC booked S$21 billion in net new money, bringing its total assets under management to S$299 billion as at December 2024.
The bank&rsquo s non-performing loan ratio as at end-December was 0.9 per cent, down 0.1 percentage point from the prior year.
Capital returns
OCBC announced plans to return S$2.5 billion of capital to shareholders over two years via special dividends and share buybacks &ndash following similar moves by peers DBS and OCBC.
This comes on the back of the bank&rsquo s &ldquo sustained earnings growth and strong capital position&rdquo , OCBC said.
The capital return comprises special dividends amounting to 10 per cent of the group&rsquo s net profit for FY2024 and FY2025, with the balance of around S$1 billion via share buybacks over two years.
Wong noted that OCBC is delivering its returns faster, over two years, compared with its peers who each have a three-year programme.
&ldquo With a bit more commitment into the special dividend, we are passing the cash back directly to our shareholders,&rdquo she said.
&ldquo We will continue to look at our options at this time, we decided it&rsquo s a combination of special dividend and share buyback, and we will continue to review this as we go along.&rdquo
For Q4, the lender has proposed a slightly lower final dividend of S$0.41 per share, from S$0.42 the year before, and recommended a special dividend of S$0.16 per share.
This brings the full-year dividend to S$1.01 per share, up from S$0.82 per share in the prior year, and represents a payout ratio of about 60 per cent of the group&rsquo s net profit after tax.
Wong disagreed that the lender was lowering its dividends. Even though ordinary dividends for Q4 are down year on year, the final payout ratio of 60 per cent is higher than last year&rsquo s final payout of 53 per cent.
She said that a 60 per cent payout ratio is &ldquo not that ordinary&rdquo OCBC is also going beyond its commitment of a 50 per cent payout ratio, with flexibility to pay more.
&ldquo You don&rsquo t pay a high special dividend every single year. So we&rsquo re sticking to what we promised and what we targeted,&rdquo she added.
The capital return plan is expected to bring the lender&rsquo s Common Equity Tier 1 (CET1) ratio down by one percentage point.
As at December 2024, its CET1 ratio stood at 17.1 per cent, from 17.2 per cent in September.
Based on fully phased-in final Basel III reforms, CET1 ratio would have been 15.3 per cent.
OCBC is targeting its CET1 to be at around 14 per cent, which will give it a good credit rating and enough room to pursue further growth, Wong said.
Growth seen
For the full year, net profit rose 8 per cent to a record S$7.6 billion.
This translated to earnings per share of S$1.67 for the full year, from S$1.55 in the prior year.
NIM for the full year stood at 2.2 per cent, down from 2.28 per cent in the prior year. This was due to a rise in funding costs which outpaced the increase in asset yields.
Net interest income rose 1 per cent to S$9.8 billion, marking a new high. This was underpinned by a 5 per cent increase in average assets from customer loans, as well as high-quality assets which were income-accretive but lower-yielding.
Non-interest income grew 22 per cent to S$4.7 billion.
Wong also gave an update on the lender&rsquo s targets to add S$3 billion in revenue from its Asean-Greater China strategy by 2025 at the two-year mark, OCBC is now close to S$2 billion.
&ldquo So hopefully, if we continue with (our one-group strategy), this will translate to profit growth,&rdquo she said.
OCBC shares fall nearly 3% after Q4 earnings miss
Fourth-quarter net profit of S$1.69 billion falls short of the S$1.78 billion consensus forecast
SHARES of OCBC : O39 -2.22%fell in early trading on Wednesday (Feb 26) morning after the lender posted a net profit for the fourth quarter that fell short of consensus estimates.
As at 9.10 am, the counter fell 2.8 per cent or S$0.50 to S$17.10 from its closing price of S$17.60 on Tuesday.
It pared losses slightly to trade at S$17.23, down 2.1 per cent or S$0.37 as at 9.40 am on Wednesday.
Before the market opened on Wednesday, OCBC reported a net profit of S$1.69 billion for the fourth quarter ended December, up 4 per cent from S$1.62 billion in the previous corresponding period.
This fell short of the S$1.78 billion consensus forecast in a Bloomberg survey of five analysts.
The lender also announced plans to return S$2.5 billion of capital to shareholders over two years via special dividends and share buybacks. The special dividends amount to 10 per cent of the group&rsquo s net profit for FY2024 and FY2025, with the balance comprising share buybacks.
This comes on the back of the bank&rsquo s &ldquo sustained earnings growth and strong capital position&rdquo .
OCBC has proposed a slightly lower final dividend of S$0.41 per share, from S$0.42 the year before. A special dividend of S$0.16 per share has also been recommended. These dividends will be paid on May 9, following the record date of Apr 28.
Including the special dividend, this brings the full-year dividend to S$1.01 per share, an increase from S$0.82 per share the prior year, representing a payout ratio of about 60 per cent of the group&rsquo s net profit after tax.
For the full year, net profit rose 8 per cent to a record S$7.59 billion, from S$7.02 billion in FY2023.
This translated to earnings per share of S$1.67 for the full year, up 8 per cent from S$1.55 in the prior year.
Despite unveiling its S$2.5 billion capital return plan, Rena Kwok, senior credit analyst at Bloomberg Intelligence, pointed out that the lender may need to &ldquo further optimise its capital structure&rdquo .
&ldquo Our calculations show its weighted average cost of capital was over 200 basis points above (its) local peers in Q4.&rdquo
After adjusting for the proposed final and special dividends, however, Kwok noted that OCBC still holds about S$700 million above its operating range of 14 per cent, which is &ldquo sufficient for potential growth plans&rdquo .
I think to declare 41:16 could be OCBC is conservative to maintain or increase the dividend amount in future. Special dividend can be easily removed. In any case, I do agree its stupid to call 41:16 instead of at least 42:15.
Fiat500 ( Date: 26-Feb-2025 14:35) Posted:
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Without the special dividend, should be well below 17 liao.
Looking forward, I see EPS will struggle to hit 1.71 per quarter (hope i am wrong), esp with tariffs.
Current price seems to reflect this. Can regular dividend go above 0.41 in Aug to reach payout ratio of 60% ? hmmm
Also, share buyback for employees (so far this is case unless there is a turnaround to cancellation) will not boost the share price for long.
Looking forward, I see EPS will struggle to hit 1.71 per quarter (hope i am wrong), esp with tariffs.
Current price seems to reflect this. Can regular dividend go above 0.41 in Aug to reach payout ratio of 60% ? hmmm
Also, share buyback for employees (so far this is case unless there is a turnaround to cancellation) will not boost the share price for long.
Thats true..The bosses really BLUR BLOB.. @44 - 13 will look very good on paper n it'll mprove sentiments also! Now the 2 bigger brothers are moving up further n further away from Ocbc! Sad..
LimBanLim ( Date: 26-Feb-2025 14:22) Posted:
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The BODs are just JLB. Logically the dividends and special dividends should be 44:13, 45:12 or 46:11. Whose stupid idea it was to give 41:16?
Now the headline becomes ' OCBC cut dividends but give special dividend' instead of ' OCBC improve/maintain its dividends and give special dividend .
Now the headline becomes ' OCBC cut dividends but give special dividend' instead of ' OCBC improve/maintain its dividends and give special dividend .
Joelton ( Date: 26-Feb-2025 14:02) Posted:
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https://www.invest-alpha.sg/view& id=859
Another possible reason for the " dump" :
At last Nov 24 Q3 results briefing , after DBS and UOB had announced the intention of share buybacks as way to return capital , OCBC mentioned that they do not intend to do buybacks , and prefers to return excess capitals in the form of special dividen . This mornings press release stated otherwise :- OCBC to return 2.5b by way of special dividen ( 10% profits ) PLUS share buyback plan .
To me , this is akin to a mini U turn , in a span of just 3 months . Investors generally prefers special dividens over share buybacks as the former is money in pocket .
All in all , I am of the opinion that $1.01 total dividens for FY 24 is still very good , although in terms of yield wise , this amount currently lags behind the two other banks .
Moving forward , assuming that OCBC profits can increase to 8b in FY 2025 , the total dividens will be $1.07 for FY 2025 .
At last Nov 24 Q3 results briefing , after DBS and UOB had announced the intention of share buybacks as way to return capital , OCBC mentioned that they do not intend to do buybacks , and prefers to return excess capitals in the form of special dividen . This mornings press release stated otherwise :- OCBC to return 2.5b by way of special dividen ( 10% profits ) PLUS share buyback plan .
To me , this is akin to a mini U turn , in a span of just 3 months . Investors generally prefers special dividens over share buybacks as the former is money in pocket .
All in all , I am of the opinion that $1.01 total dividens for FY 24 is still very good , although in terms of yield wise , this amount currently lags behind the two other banks .
Moving forward , assuming that OCBC profits can increase to 8b in FY 2025 , the total dividens will be $1.07 for FY 2025 .
Bro, you have a very good observation and did touch on the key point!
Echoes ( Date: 26-Feb-2025 09:36) Posted:
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It was just the 4q that missed estimates.
There is no lack of special dividends.
There is even share buybacks.
I'm extremely surprised the market is so cool.
Maybe bear shld also go somewhere and cool off.
But one thing is for sure, shortist can take temporary advantage.
Me going to close shop now and dream of 20 dollars.
prophetjul ( Date: 26-Feb-2025 09:52) Posted:
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Missed estimates. Maybe it' s the lack of special dividends. And a reduction in final dividend.
Earnings are just meh.
Earnings are just meh.
huattuatua ( Date: 26-Feb-2025 09:18) Posted:
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That's a fair point and observation. In the end, ocbc stuck with 50 percent payout ratio and adjusted down their final dividend to keep to a dividend cover of 2.
But that special dividend of 10 percent net profits that will be paid in 2025 and 2026 is significant.
It's a double special dividend that ensures ocbcs dividend payout will be significant higher than last few years.
Market does not seem to digest that
Echoes ( Date: 26-Feb-2025 09:36) Posted:
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Quite possible explanation why investors are throwing down the OCBC share despite total dividend of 57 cents.
Not sure why management decided on lower final div vs interim.
BTW, who are those ' investors' being referred to here?
Surely not folks who see good value of OCBC share.
Strange indeed.
Not sure why management decided on lower final div vs interim.
BTW, who are those ' investors' being referred to here?
Surely not folks who see good value of OCBC share.
Strange indeed.
Echoes ( Date: 26-Feb-2025 09:36) Posted:
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U hit 2 points .....interim higher ....which can means dont expect too much in 1H 2025 .
why push to 16 for special ...as this is NOT expected in 1H 2025 and end next year too ( if needed to cut) .
WHat is more worrying is the 19+% in expenses.....and Q on Q is not growing . ....just my tots
Capital return is very much PUSH by DBS n UOB or today its share price could be even worst .
( hope it resolve the GE issue asap )
DYODD
why push to 16 for special ...as this is NOT expected in 1H 2025 and end next year too ( if needed to cut) .
WHat is more worrying is the 19+% in expenses.....and Q on Q is not growing . ....just my tots
Capital return is very much PUSH by DBS n UOB or today its share price could be even worst .
( hope it resolve the GE issue asap )
DYODD
Echoes ( Date: 26-Feb-2025 09:36) Posted:
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I suspect investors are not happy with 41 + 17 .
Sentiment may be different if its declared as 46 + 11 , even though the total payout is the same .
The total dividens for FY 23 is 82 cts .
Dividens for FY 24 is 85 cts ( excluding specials ) , which means the dividen increase is 3.65% ( 82 to 85 )
Had it been declared as 46 + 11 , then the dividen increase is 9.75% ( 82 to 90 cts ) .
The interim div for FY 24 is 44 cts and final div FY 24 41 cts . In all my 15 years of owning this stock , this is the first time it has paid a final dividen that is lower than its interim . Previous years , the final dividen is either same or more than interim .
My 2 cents .
Sentiment may be different if its declared as 46 + 11 , even though the total payout is the same .
The total dividens for FY 23 is 82 cts .
Dividens for FY 24 is 85 cts ( excluding specials ) , which means the dividen increase is 3.65% ( 82 to 85 )
Had it been declared as 46 + 11 , then the dividen increase is 9.75% ( 82 to 90 cts ) .
The interim div for FY 24 is 44 cts and final div FY 24 41 cts . In all my 15 years of owning this stock , this is the first time it has paid a final dividen that is lower than its interim . Previous years , the final dividen is either same or more than interim .
My 2 cents .
OCBC& rsquo s
4Q2024 earnings of S$1.69bn were slightly below our estimates due to higher-than-expected allowances and expenses, with FY24 earnings at 96% of our FY24e forecast (S$7,866mn).
Net interest income was flat YoY at S$2.46bn as NIM fell 14bps YoY to 2.15%. Fee income rose 12% YoY from higher WM and investment banking fees, while trading income rose 37% YoY. Total allowances were up 12% YoY, and expenses rose 19% and cost-to-income ratio was higher at 45.7% (4Q23: 40%).
Final dividend dipped 2% YoY to 41 cents with FY24 total dividends at S$1.01 (FY23: S$0.82) inclusive of special dividend of 16 cents. OCBC announced capital distribution of S$2.5bn over two years which includes special dividend at 10% of annual net profit in FY24 and FY25 and share buybacks over two years. FY25e guidance of NIM at around 2%, mid-single digit loan growth, CIR in the low 40% and credit costs from 20-25bps.
hmm OCBC result at best is " average" .....expenses rose 19% and GE contribution is lower. QnQ is lower.
Even Full year 41c dividend is LOWER than 44c expected ......special d if 16c might be a saver till XD >
DYODD
4Q2024 earnings of S$1.69bn were slightly below our estimates due to higher-than-expected allowances and expenses, with FY24 earnings at 96% of our FY24e forecast (S$7,866mn).
Net interest income was flat YoY at S$2.46bn as NIM fell 14bps YoY to 2.15%. Fee income rose 12% YoY from higher WM and investment banking fees, while trading income rose 37% YoY. Total allowances were up 12% YoY, and expenses rose 19% and cost-to-income ratio was higher at 45.7% (4Q23: 40%).
Final dividend dipped 2% YoY to 41 cents with FY24 total dividends at S$1.01 (FY23: S$0.82) inclusive of special dividend of 16 cents. OCBC announced capital distribution of S$2.5bn over two years which includes special dividend at 10% of annual net profit in FY24 and FY25 and share buybacks over two years. FY25e guidance of NIM at around 2%, mid-single digit loan growth, CIR in the low 40% and credit costs from 20-25bps.
hmm OCBC result at best is " average" .....expenses rose 19% and GE contribution is lower. QnQ is lower.
Even Full year 41c dividend is LOWER than 44c expected ......special d if 16c might be a saver till XD >
DYODD
Yes. I managed to pick up some this morning for coming Fat Fat dividend!
shk363 ( Date: 26-Feb-2025 09:20) Posted:
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Probably factor in the special div..
looks like might test 17?
looks like might test 17?