3 really good things about OCBC's 2Q13 results

2Q loans rose 7%.

According to CIMB, the positives in 2Q13 were: 1) very strong loan growth; 2) flattening margins; and 3) steady growth for various fee-income streams.

OCBC’s 2Q loans grew 7% qoq or S$10.4bn, the fastest among the three banks. About 21% of its new loans were S$ loans, with the bulk (51%) in US$.

Here's more from CIMB:

New loans were roughly 1/3 trade-finance loans, 1/3 corporate Singapore loans and 1/3 overseas loans. Aside from US$ trade loans (which every bank seems to be doing), OCBC’s other large US$ loans in 2Q were made to a Singapore transport corporate to fund its overseas business i.e. low-risk.

YTD, loan growth is already 10.3% but OCBC seems reluctant to raise its guidance beyond 9-11%. We think that part of the reason for its muted guidance might be slowing mortgages.

OCBC said that even if it cannot raise mortgage volumes easily ahead, mortgage yields should be higher (as rates booked today are higher than before). 2Q margins (1.64%) were flat qoq. OCBC guided that NIMs were likely to be stable ahead. As loans outpaced deposits, group LDR climbed to 89% (1Q: 87%).

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