In a report released yesterday, Wee Kuang Tay from CGS-CIMB downgraded OCBC (OVCHF – Research Report) to a Hold, with a price target of S$17.20.
Wee Kuang Tay has given his Hold rating due to a combination of factors impacting OCBC’s financial outlook. The anticipated net profit for the first quarter of 2025 is expected to be lower year-on-year, primarily due to a decrease in net interest income and a higher cost-to-income ratio following recent acquisitions. These factors contribute to a projected decline in earnings for the fiscal year 2025, reversing previous growth expectations.
Additionally, the economic environment remains uncertain, influenced by trade tensions and potential interest rate cuts, which could further compress net interest margins. As a result, the earnings per share estimates for the upcoming years have been revised downward, and the return on equity assumption has been lowered. Despite potential upside from investment gains and wealth management growth, the risks associated with the current economic conditions justify the Hold rating.
In another report released on April 8, CLSA also downgraded the stock to a Hold with a S$15.90 price target.
OVCHF’s price has also changed slightly for the past six months – from $11.650 to $12.775, which is a 9.66% increase.