OCBC shares fall nearly 3% after Q4 earnings miss
SHARES of OCBC fell in early trading on Wednesday (Feb 26) morning after the lender posted a net profit for the fourth quarter that fell short of consensus estimates.
As at 9.10 am, the counter fell 2.8 per cent or S$0.50 to S$17.10 from its closing price of S$17.60 on Tuesday.
It pared losses slightly to trade at S$17.23, down 2.1 per cent or S$0.37 as at 9.40 am on Wednesday.
Before the market opened on Wednesday, OCBC reported a net profit of S$1.69 billion for the fourth quarter ended December, up 4 per cent from S$1.62 billion in the previous corresponding period.
This fell short of the S$1.78 billion consensus forecast in a Bloomberg survey of five analysts.
The lender also announced plans to return S$2.5 billion of capital to shareholders over two years via special dividends and share buybacks. The special dividends amount to 10 per cent of the group’s net profit for FY2024 and FY2025, with the balance comprising share buybacks.
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This comes on the back of the bank’s “sustained earnings growth and strong capital position”.
OCBC has proposed a slightly lower final dividend of S$0.41 per share, from S$0.42 the year before. A special dividend of S$0.16 per share has also been recommended. These dividends will be paid on May 9, following the record date of Apr 28.
Including the special dividend, this brings the full-year dividend to S$1.01 per share, an increase from S$0.82 per share the prior year, representing a payout ratio of about 60 per cent of the group’s net profit after tax.
For the full year, net profit rose 8 per cent to a record S$7.59 billion, from S$7.02 billion in FY2023.
This translated to earnings per share of S$1.67 for the full year, up 8 per cent from S$1.55 in the prior year.
Despite unveiling its S$2.5 billion capital return plan, Rena Kwok, senior credit analyst at Bloomberg Intelligence, pointed out that the lender may need to “further optimise its capital structure”.
“Our calculations show its weighted average cost of capital was over 200 basis points above (its) local peers in Q4.”
After adjusting for the proposed final and special dividends, however, Kwok noted that OCBC still holds about S$700 million above its operating range of 14 per cent, which is “sufficient for potential growth plans”.
