Overseas Chinese Banking Corporation (OCBC Bank)

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#1
The Straits Times
Jul 5, 2012
OCBC Bank plans $1b preference share sale

Sources say coupon rate is about 4% and minimum tranche is $250,000

By Magdalen Ng

OCBC BANK plans to sell $1 billion worth of preference shares to major investors in the next few days to shore up liquidity.

Industry sources say the bank will be offering a coupon rate of about 4 per cent that will be paid twice-yearly.

The payout is non-cumulative, which means that if the bank does not pay dividends this year, it is not obliged to make it up the following year. The shares will be callable after 5 1/2 years.

This placement will be offered only to institutional investors and sophisticated investors, with a minimum tranche of $250,000.

One reason OCBC may want to issue preference shares now could be to further strengthen its Tier 1 capital adequacy ratio (CAR), a financial buffer required by the authorities.

As of March 31, OCBC's Tier 1 CAR was 14.7 per cent, well above the 6 per cent required by the central bank.

However, under the new Basel III rules taking effect from Jan 1 next year, preference shares with a mandatory coupon will no longer qualify as Tier 1 capital.

OCBC declined to comment.

CIMB head of research Kenneth Ng said OCBC could be 'trying to lock in liquidity when the market is still open'.

The last time a local bank issued preference shares was in 2010, when DBS Bank offered $1.7 billion worth of preference shares to institutional investors and $800 million worth of preference shares to retail investors in two separate issues.

Those shares paid a dividend of 4.7 per cent a year for 10 years. As of yesterday, DBS preference shares were trading on the Singapore Exchange at $102.8, which would give a yield of 4.29 per cent.

OCBC's last preference share issue was in 2008. Those shares were available to retail investors as well, and the bank raised $1.5 billion at a coupon rate of 5.1 per cent. Payouts are made twice-yearly, in March and September, for the first 10 years until Sept 20, 2018.

Preference shares have been popular with retail investors for their regular returns and reputation for being safe. When DBS did not offer a retail tranche initially, many retail investors complained about being excluded.

Given current low interest rates, OCBC's promise of a dividend of around 4 per cent may seem attractive to investors, but experts have cautioned that preference shares are riskier investments than fixed deposits or bonds.

Preference shareholders rank lower than bank deposits, interbank borrowings and other creditors, including holders of subordinated debt, in terms of payment priority.

This means that they will be among the last to get paid, but ahead of ordinary shareholders, should the bank go under.

songyuan@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
"DBS preference shares were trading on the Singapore Exchange at $102.8" ... should be around 106. Mistake !

Just my Diary
corylogics.blogspot.com/


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#3
(05-07-2012, 09:01 AM)corydorus Wrote: "DBS preference shares were trading on the Singapore Exchange at $102.8" ... should be around 106. Mistake !

The writer might have gotten mixed up with the ocbc 4.2% ncps? Huh
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#4
The journalist quoted the latest price of the institutional DBS 4.7% tranche - not the retail 4.7% tranche. Currently the Institutional last done is S$ 102.45, the retail last done is S$ 105.80. Please bear in mind that buyers of the institutional units must stump up a) a minimum of S$ 250,000 (nominal value) and b) the accumulated dividend interest since the last payout at end April 2012. Hope this adds some clarity.

Vested in DBS 4.7%'s and application for OCBC 4.0%'s submitted.
(06-07-2012, 02:56 AM)Muck Wrote:
(05-07-2012, 09:01 AM)corydorus Wrote: "DBS preference shares were trading on the Singapore Exchange at $102.8" ... should be around 106. Mistake !

The writer might have gotten mixed up with the ocbc 4.2% ncps? Huh
RBM, Retired Botanic MatSalleh
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#5
Some concerns:

1) Dividend is non cumulative - why such a clause? So is it still attractive?

2) If buy through POEMS, need to pay 0.25% comm?

3) Traded under OTC, why not under SGX?

(06-07-2012, 01:22 PM)RBM Wrote: The journalist quoted the latest price of the institutional DBS 4.7% tranche - not the retail 4.7% tranche. Currently the Institutional last done is S$ 102.45, the retail last done is S$ 105.80. Please bear in mind that buyers of the institutional units must stump up a) a minimum of S$ 250,000 (nominal value) and b) the accumulated dividend interest since the last payout at end April 2012. Hope this adds some clarity.

Vested in DBS 4.7%'s and application for OCBC 4.0%'s submitted.
(06-07-2012, 02:56 AM)Muck Wrote:
(05-07-2012, 09:01 AM)corydorus Wrote: "DBS preference shares were trading on the Singapore Exchange at $102.8" ... should be around 106. Mistake !

The writer might have gotten mixed up with the ocbc 4.2% ncps? Huh
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#6
OCBC online banking has added a new feature called Money In$ights. Found it to be interesting and useful. Can also compare against others that fit your profile...

http://www.ocbc.com/personal-banking/onl...ights.html
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#7
The Straits Times
www.straitstimes.com
Published on Feb 16, 2013
OCBC beats Q4 estimates with profit of $663m

Jump in non-interest income boosts bank's earnings

By Magdalen Ng

OCBC Bank yesterday beat market expectations by posting a fourth-quarter net profit of $663 million, up 12 per cent from a year earlier.

A poll of 10 analysts by Bloomberg had produced an average estimate of $624 million.

While net interest income for the quarter was muted because of compressed net interest margins, a spike in non-interest income boosted the earnings of South-east Asia's second-largest lender.

Net interest income was $921 million, similar to $925 million for the same quarter in the preceding year. Loans growth was offset by a slide in net interest margins - a measure of the profitability of loans, from 1.85 per cent to 1.7 per cent.

In a statement to the Singapore Exchange, the bank said the margin compression was largely due to continued low interest rates, the re-pricing of mortgage loans in response to market competition and other factors.

Non-interest income, however, surged 32 per cent from a year earlier to $757 million, as a robust wealth management business saw fees and commission up 18 per cent to $304 million.

The contribution from OCBC's life assurance business was also up from $51 million a year earlier to $210 million, on the back of mark-to-market gains and strong underlying insurance business in the quarter.

For the full year, the bank posted a $3.99 billion net profit, which includes a divestment gain of $1.17 billion, net of tax, from the sale of its stakes in Fraser & Neave and Asia Pacific Breweries.

Excluding the one-time sales, core profit was also at a record $2.83 billion.

Operating expenses were up 11 per cent to $2.7 billion mainly due to increased staff costs.

OCBC declared a final dividend of 17 cents per share, bringing the total dividend to 33 cents per share. The core dividend payout ratio was reduced from 45 per cent a year ago to 40 per cent.

Explaining why the OCBC board did not declare a special dividend given the divestment gain, chief executive Samuel Tsien said the gains were retained for future core investments, especially since the bank sees significant opportunities in Greater China and Indonesia.

"We will try to find complementary opportunities to expand our franchise. In each of these markets, we are not comprehensively present in all market segments," he said.

Mr Tsien was cautiously upbeat about the move to appoint Industrial and Commercial Bank of China (ICBC) as the yuan clearing bank in Singapore.

He said it represented new opportunities, particularly on the consumer side.

However, he added that the yuan is not a natural currency for Singapore and Asean and that to get around that, a market has to be created where all of the yuan for the region is cleared here.

In the year ahead, Mr Tsien expects loans growth to still be in the "high single digits", even though chief operating officer Ching Wei Hong noted that mortgage loans were down by 20 per cent to 30 per cent with the latest cooling measures announced by the Government.

CIMB head of research Kenneth Ng said that while Great Eastern's strong performance in the fourth quarter contributed positively to OCBC's results, he does not see "lasting share-price propellers for OCBC, what with structural headwinds for local banks from weak loan demand, unrelenting margin pressure and credit-cost normalisation".

Earnings per share for the full year rose to 79.1 cents from 64.8 cents a year earlier, while net asset value per share was $6.68 as of Dec 31, up from $6.02 a year earlier.

OCBC shares fell four cents to $9.99 yesterday.

songyuan@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#8
Thanks for sharing the Straits Times piece on OCBC just now Musicwhiz. An interesting slant on the PRC component of OCBC’s business reported on cnbc.com (and note the comparison with DBS towards the end) ………….
QUOTE

This Is How We'll Drive Our China Business: OCBC CEO
Published: Friday, 15 Feb 2013 | 1:38 AM ET
By: Rajeshni Naidu-Ghelani Assistant Producer, CNBC

The CEO of OCBC, which posted a record profit on Friday, said the bank would focus on growing its offshore activities in Greater China as more Chinese firms look to expand overseas. "We'll be pursuing those companies in China, but we would really like them to bank with us when they go outside of China to invest in key countries such as Indonesia, Malaysia, and Singapore, [where] we have a competitive edge to pursue that strategy," Samuel Tsien, the CEO of Southeast Asia's second biggest lender, told CNBC. The real target for the Singapore bank's future growth in China will be growing "with the business that will be generated as these companies go offshore," Tsien said.

OCBC on Friday posted a 12 per cent jump in fourth-quarter net profit to $537 million, pushing its 2012 net profit up by 73 per cent, compared with $480 million a year earlier. OCBC also saw profit before taxes in Greater China rise by 35 per cent year-on-year to $213.6 million.

Greater China currently contributes over 7 per cent of the bank's profits worldwide and Tsien said he expects the number to rise in 2013. Loans in Greater China, however, fell 13 percent in 2012 from the previous year and moves by China's central bank, the People's Bank of China, to liberalize interest rates impacted OCBC's margins, Tsien said.

Last week, bigger rival DBS posted a fourth-quarter net profit of $613.5 million, below expectations, while its Greater China business recorded a net loss of $23 million in the same quarter.
—By CNBC.com's Rajeshni Naidu-Ghelani

UNQUOTE

Not vested
RBM, Retired Botanic MatSalleh
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#9
No more excuse to say no time to manage one's financial Tongue

OCBC launches personal financial management tool for online and mobile banking

OCBC Bank has launched Singapore’s first personal financial management tool for online and mobile banking. Called OCBC Money Insights, the tool enables customers to easily monitor expenses, set budgets and save towards their goals.

Available on both the bank’s internet banking service and its iPhone and iPad mobile banking applications, the tool is integrated with customers’ savings, current and credit card accounts. This saves customers the hassle of manually updating their daily expenditure via spreadsheets or other standalone personal financial management apps.

With OCBC Money Insights, customers are able to:
• Track spending via automatically-categorised expenses
• Set budgets and manage expenses through SMS or email alerts
• Set automatic contributions to different Savings Goals within one account
• Get insights on financial behaviour of people with similar demographic

http://www.theedgesingapore.com/the-dail...nking.html
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#10
(22-04-2013, 03:03 PM)CityFarmer Wrote: No more excuse to say no time to manage one's financial Tongue

OCBC launches personal financial management tool for online and mobile banking

OCBC Bank has launched Singapore’s first personal financial management tool for online and mobile banking. Called OCBC Money Insights, the tool enables customers to easily monitor expenses, set budgets and save towards their goals.

Available on both the bank’s internet banking service and its iPhone and iPad mobile banking applications, the tool is integrated with customers’ savings, current and credit card accounts. This saves customers the hassle of manually updating their daily expenditure via spreadsheets or other standalone personal financial management apps.

With OCBC Money Insights, customers are able to:
• Track spending via automatically-categorised expenses
• Set budgets and manage expenses through SMS or email alerts
• Set automatic contributions to different Savings Goals within one account
• Get insights on financial behaviour of people with similar demographic

http://www.theedgesingapore.com/the-dail...nking.html

OCBC has the best online banking experience, IMO
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