OCBC, the Financial sector company, was revisited by a Wall Street analyst on August 1. Analyst Wee Kuang Tay from CGS-CIMB reiterated a Hold rating on the stock and has a S$17.20 price target.
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Wee Kuang Tay has given his Hold rating due to a combination of factors influencing OCBC’s financial outlook. Although OCBC demonstrated positive loan and fee income growth in the second quarter of 2025, the management’s cautious stance for the latter half of the year reflects ongoing macroeconomic uncertainties. These uncertainties, coupled with potential interest rate cuts by the US Federal Reserve, may exert pressure on the bank’s net interest margin (NIM), prompting a conservative outlook.
Additionally, while OCBC’s credit quality remains stable with proactive management of its commercial real estate portfolio, the bank’s capital return initiatives appear limited. The elevated dividend payout ratio is expected to be short-lived, and the bank’s financial performance for the first half of 2025 aligns with expectations, forming a basis for maintaining the Hold rating. Upside risks include potential recovery in interest rates and new capital return initiatives, while downside risks involve possible setbacks in loan growth and asset quality deterioration.
In another report released today, DBS also maintained a Hold rating on the stock with a S$15.80 price target.