OCBC recovery gains pace, shares bouncing back

Singapore-based lender OCBC’s rebound is in sight, stoking investor confidence and hopes of bigger payouts.

  • Oversea-Chinese Banking Corp (OCBC) (SGX: O39) share price hits S$11.195 per share, up 0.9%
  • The stock has bounced back to its pre-Covid levels
  • Analysts raised their target prices given the lender’s impending recovery
  • There may be room for special or higher dividends in the future
  • Trade OCBC shares, long or short, with an IG account

OCBC share price: What’s the latest?

OCBC’s stock was trading at S$11.11 as of 13:29 SGT on Tuesday, up 0.2% on the day, after 3.3 million shares changed hands. It advanced as much as 0.9% to S$11.195 in the morning.

Year-to-date, the counter has climbed some 10% from S$10.06 at end-2020. It is now trading near February 2020 levels, before the plunge to March 2020 lows amid pandemic fears.

Analysts’ average 12-month target price is about S$12.29, with 14 research teams recommending ‘buy’ on OCBC, seven rating it ‘hold’, and none with ‘sell’ calls, according to Bloomberg data.

Why did analysts raise their targets?

RHB’s research team has upgraded OCBC shares to a ‘buy’ call, and gave a higher target price of S$12.50, from S$9.50 previously.

OCBC’s operations and asset quality have seen sustained quarter-on-quarter improvements, underpinned by the reopening of regional economies, resulting in a more optimistic guidance on credit cost and loan growth, RHB wrote last Thursday (25 February).

The bank’s return on equity is also likely to post a ‘healthy’ recovery, while its robust capital provides room for higher dividends further ahead, RHB analysts said. ‘These, we believe, will support a share price re-rating,’ they added.

Maybank increased its target to S$12.74, up from S$12.24, while keeping its ‘buy’ rating intact. Analyst Thilan Wickramasinghe liked OCBC’s better-than-expected asset quality, and also anticipated its loan growth to regain momentum amid an improving operating environment.

‘Strong capital and provisioning buffers could provide upside surprise opportunities for write-backs, special dividends and/or higher payouts going forward,’ Wickramasinghe wrote.

Meanwhile, DBS Group analyst Lim Rui Wen remained conservative over OCBC’s income outlook into 2021 and 2022, as she believes the management will probably continue adopting strict cost discipline to manage its bottom-line.

Nonetheless, she raised her earnings estimates on better net interest margins and loan growth expectations, and maintained a ‘buy’ call with a S$12.50 target.

What could support a stronger recovery?

Fee income will remain a positive driver for OCBC, aided by the resumption in business activities and healthy demand for wealth management products, RHB analysts said.

The bank’s management expects a stronger recovery from the second half of 2021, given the improving consumer sentiment and business confidence. This would support a mid-single digit loan growth for the whole of 2021, faster than the 0.5% increase in 2020, RHB noted.

Maybank’s Wickramasinghe said OCBC stands to benefit from North Asian recovery and North-South trade flows. ‘Its incoming CEO’s track record in China should also be complementary.’

Lim expects the bank’s active provisioning to support its share price and limit downside risks. Excess capital can also be deployed for growth, or returned to shareholders via special dividends, she added.

How to trade OCBC stocks with IG

Are you feeling bullish or bearish on OCBC's stocks?

Either way you can buy (long) or sell (short) the asset on IG's industry-leading trading platform, by investing in the share directly, in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Oversea-Chinese Banking Corp> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.