OCBC's net profit to grow to $4.89b in 2018

This will be driven by the rising loan growth, and easing of oil and gas woes.

DBS Equity Research reported this year’s forecast of Oversea-Chinese Banking Corporation (OCBC)’s net profit of $4.89b, up by 18.98% YoY from $4.11b in 2017.

This is mainly due to the rise in loan growth, which is expected to increase by at least 7% this year.

Further, the worst is over for the oil and gas sector, which slightly affected OCBC’s earnings last year, DBS Research said.

“Normalised credit costs should ease to pre-oil & gas woes era, which we believe should stay below 30bps. We are assuming credit cost of 26bps across FY18-20F for now but there could be upside risks to our forecasts should these be lower with the adoption of IFRS9/SFAS 109,” DBS Research added.

Singapore Business Review also previously reported that OCBC’s total earnings reached an all time high of $4.15b last year.

Here’s more from DBS Research:

Although its capital ratios stack the lowest among peers currently, assuming OCBC sticks to a minimum of its 40% payout on core earnings and is comfortable with a minimum CET1 ratio of 12.5%, we believe there could be room for some dividend upside from here. We have nevertheless assumed that dividend per share would stay at 38 Scts for now, with a corresponding 37% payout ratio based on our FY18F earnings.

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