For FY2021 ended December 2021, OCBC reported a net profit of $4.86 billion, up 35% y-o-y. Excluding Great Eastern Holdings, OCBC’s banking business recorded a net profit of $3.926 billion, up 41% y-o-y. Net interest income decreased 2% from the previous year to $5.86 billion, mainly attributable to a 7 basis points (bps) fall in net interest margin (NIM), despite a 3% increase in average asset balances. This decline was offset by robust growth in non-interest income, which climbed 14% to a record $4.74 billion from $4.17 billion in FY2020. Net fee income rose 12% to a new high of $2.25 billion.
As at the opening bell following the announcement of its FY2021 results on the morning of Feb 23, Oversea-Chinese Banking Corp’s (OCBC) share price fell 5.8% to $12.40 compared to the previous session’s close. Although OCBC's share price recovered to end at $12.56 on Feb 23, it slumped to $12 on Feb 24, following Russia's invasion of Ukraine.
The “first look” notes from analysts indicated that OCBC’s net profit was below expectations. “OCBC reported net profit of $973 million for 4QFY2021 (down 14% y-o-y and 20% q-o-q), below our forecast of $1,122 million,” writes Jonathan Koh, an analyst at UOB Kay Hian. Elsewhere, Maybank analyst Thilan Wickramasinghe writes in his report: “While rising rates could be a boon to interest income, [OCBC’s] larger dependence on markets-linked income sources exposes it to volatility and lowers earnings visibility in the current geopolitical backdrop.” He has downgraded OCBC to a “hold” from a “buy”.
