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141-160 of 2029
OCBC&rsquo s Q1 profit up 5% to S$1.98 billion CEO confident about 2024
The move to wholly acquire Great Eastern should also add to the bank&rsquo s return on equity, she says
OCBC group chief executive Helen Wong is confident that the lender can deliver on its 2024 targets, amid the bank&rsquo s strong performance and an all-time-high income in the first quarter of the year.
Speaking at a briefing on its first-quarter results on Friday (May 10), she said she expects the lender&rsquo s return on equity (ROE) for 2024 to be at the higher end of its 13 to 14 per cent target, based on its current business trajectory.
In addition, OCBC&rsquo s move to wholly acquire Great Eastern Holdings (GEH) should also add to ROE, she said. On Friday, OCBC made an offer &ndash at S$25.60 per share &ndash to acquire the 11.56 per cent stake in the insurer that the bank does not currently own, with the aim of delisting GEH.
If there are fewer interest rate cuts than originally anticipated, Wong also expects 2024&rsquo s net interest margins (NIMs) will reach the higher end of its 2.2 to 2.5 per cent target range.
She suggested that there may be two rate cuts in 2024, dialling back from the lender&rsquo s original expectations of three cuts.
The bank&rsquo s Q1 net profit rose 5 per cent on year to a record S$1.98 billion, amid strong growth in operating profit, beating the S$1.85 billion consensus forecast in a Bloomberg survey of three analysts.
Wong noted that the group&rsquo s key businesses all did well, as reflected in the operating performance across its banking, wealth management and insurance segments.
Total income rose 8 per cent to a new quarterly high of S$3.63 billion.
Net interest income rose 4 per cent to S$2.44 billion, as a 5 per cent growth in average assets more than compensated for the decline in NIM. First-quarter NIM fell three basis point (bps) on the year to 2.27 per cent, as rising funding costs offset higher asset yields.
Customer loans rose 2 per cent on the year to S$301 billion on constant currency terms, driven by higher consumer and corporate loans.
Despite this, OCBC kept its target for low-single-digit loan growth for 2024. Wong said uncertainty remains in the market, and that there are no clear signs of a rise in loan demand for the rest of the year.
Nevertheless, she added that the lender is closely watching growing interest in trade within Asia, and expects more clarity on loan growth in the second quarter.
&ldquo We try to be prudent &ndash it doesn&rsquo t mean that we don&rsquo t work hard. But at this point, we don&rsquo t see that there is a very high opportunity to (upgrade our loan growth target) to mid-single-digit,&rdquo she said.
Non-interest income was up 17 per cent on the year to S$1.2 billion, due to an improvement in fee, trading and insurance income.
Fee income rose 6 per cent to S$479 million amid growth in wealth management fees, driven by increased customer activities.
Assets under management rose 1 per cent to S$273 billion, while net new money for the quarter was around S$6 billion.
Wong said the lender is not seeing a &ldquo big jump&rdquo in leveraging as people are still cautious about the market, but wealth fees have increased as customers take more action in a more favourable market.
Meanwhile, trading income rose 45 per cent to S$370 million driven by record customer flow income and improved non-customer flow income.
As for insurance, profit contribution from GEH rose 28 per cent to S$260 million amid better investment performance and improved claims experience.
The bank&rsquo s non-performing loans (NPL) ratio at the end of the quarter was 1 per cent, down 0.1 percentage point from the previous year.
Total allowances were S$169 million, higher than the S$110 million the previous year, mainly due to increased allowances for impaired assets.
Wong said OCBC&rsquo s books remain sound. While there were some clients in Asean this quarter that contributed to the formation of new non-performing assets, there are no systemic risks.
She said there will be, once again, more clarity on its 2024 allowances in the second quarter, adding that the bank will continue to ensure that the NPL ratio does not rise fast.
OCBC is maintaining its target for credit costs at between 20 and 25 bps for 2024.
ROE on an annualised basis stood at 14.7 per cent, unchanged year on year and up 2.3 percentage points on the quarter.
Annualised earnings per share stood at S$1.76 for the quarter, up 5 per cent from S$1.68 the year before.
The Great Eastern offer
Speaking on the offer to fully acquire and privatise GEH, Wong noted that the increased investment will fortify its &ldquo one group&rdquo spirit and increase synergies between the lender and the insurer.
She was unable to comment further on the deal, but noted the absence of integration risks with acquiring GEH.
&ldquo This is a very natural increase in a business that we already know very well and have synergised value.
&ldquo But we&rsquo re looking at driving further synergy, because there is still a difference between working with an independently listed company and a non-listed company,&rdquo she said.
Think should get revised to 30s to he a fair reasonable offer..
AIA in Hong Kong is trading near it Embdded Value.
chartiskao ( Date: 10-May-2024 13:54) Posted:
OCBC offer price of GE is $25.6 so much below GE' s enbedded value of $37,current price of GE is $25.8
NBEV is a measure of the long-term profitability of new sales. GEH also announced that its embedded value in FY2023 of $17.3 billion (or $36.59 per share) represented a 3.2% decline compared to its FY2022 embedded value of $17.9 billion.26 Feb 2024 |
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No greed, price fair, take or leave
OCBC offer price of GE is $25.6 so much below GE' s enbedded value of $37,current price of GE is $25.8
NBEV is a measure of the long-term profitability of new sales. GEH also announced that its embedded value in FY2023 of $17.3 billion (or $36.59 per share) represented a 3.2% decline compared to its FY2022 embedded value of $17.9 billion.26 Feb 2024
Defence line at 1400
May be able to get cheaper.
But while stocks last
MrBear12 ( Date: 08-May-2024 08:52) Posted:
| Bid Vol |
Bid |
| 220,300 |
14.0000 |
| 200 |
13.9800 |
| 2,000 |
13.9700 |
| 8,300 |
13.9600 |
| 3,600 |
13.8900 |
| 100 |
13.8600 |
| 5,400 |
13.8500 |
| 500 |
13.8200 |
| 2,000 |
13.8000 |
| 1,000 |
13.7800 |
| 3,000 |
13.7600 |
| 3,000 |
13.7400 |
| 1,800 |
13.7000 |
| 1,100 |
13.6800 |
| 5,500 |
13.5000 |
| 200 |
13.4800 |
| 3,700 |
13.4100 |
| 3,200 |
13.2500 |
| 2,000 |
13.2100 |
| 3,500 |
13.2000 |
| Ask |
Ask Vol |
| 14.0000 |
204,300 |
| 14.0100 |
73,700 |
| 14.0200 |
3,100 |
| 14.0300 |
3,000 |
| 14.0400 |
3,100 |
| 14.0500 |
3,600 |
| 14.0600 |
33,000 |
| 14.0700 |
3,000 |
| 14.0800 |
7,200 |
| 14.0900 |
4,000 |
| 14.1000 |
66,700 |
| 14.1100 |
4,000 |
| 14.1200 |
13,000 |
| 14.1300 |
3,000 |
| 14.1400 |
3,000 |
| 14.1500 |
24,500 |
| 14.1600 |
4,600 |
| 14.1700 |
3,000 |
| 14.1800 |
4,000 |
| 14.1900 |
3,000 |
MrBear12 ( Date: 08-May-2024 08:30) Posted:
Xd day for ocbc.
Our chance to grab below 14.
Can we get it? |
|
|
|
| Bid Vol |
Bid |
| 220,300 |
14.0000 |
| 200 |
13.9800 |
| 2,000 |
13.9700 |
| 8,300 |
13.9600 |
| 3,600 |
13.8900 |
| 100 |
13.8600 |
| 5,400 |
13.8500 |
| 500 |
13.8200 |
| 2,000 |
13.8000 |
| 1,000 |
13.7800 |
| 3,000 |
13.7600 |
| 3,000 |
13.7400 |
| 1,800 |
13.7000 |
| 1,100 |
13.6800 |
| 5,500 |
13.5000 |
| 200 |
13.4800 |
| 3,700 |
13.4100 |
| 3,200 |
13.2500 |
| 2,000 |
13.2100 |
| 3,500 |
13.2000 |
| Ask |
Ask Vol |
| 14.0000 |
204,300 |
| 14.0100 |
73,700 |
| 14.0200 |
3,100 |
| 14.0300 |
3,000 |
| 14.0400 |
3,100 |
| 14.0500 |
3,600 |
| 14.0600 |
33,000 |
| 14.0700 |
3,000 |
| 14.0800 |
7,200 |
| 14.0900 |
4,000 |
| 14.1000 |
66,700 |
| 14.1100 |
4,000 |
| 14.1200 |
13,000 |
| 14.1300 |
3,000 |
| 14.1400 |
3,000 |
| 14.1500 |
24,500 |
| 14.1600 |
4,600 |
| 14.1700 |
3,000 |
| 14.1800 |
4,000 |
| 14.1900 |
3,000 |
MrBear12 ( Date: 08-May-2024 08:30) Posted:
Xd day for ocbc.
Our chance to grab below 14.
Can we get it? |
|
Xd day for ocbc.
Our chance to grab below 14.
Can we get it?
Separate businesses.
Can also selloff a small amount to other investors but retain control
Joelton ( Date: 07-May-2024 10:40) Posted:
OCBC shouldn&rsquo t absorb Great Eastern entirely
AS A shareholder of OCBC, I am firmly of the view that it is not such a great idea for OCBC to absorb Great Eastern entirely. To do so would enhance the risk for OCBC as a bank and at the same time, inhibit the growth of Great Eastern as an insurer.
Basically, banking and insurance are two distinctively different types of business, each subject to entirely different underwriting considerations and approaches to risk management.
Given the increasingly higher risk in life insurance these days, with an aging population and the adverse impact of extreme weather conditions resulting from climate change on non-life business, Great Eastern must remain a strong and independent entity with a strong board of its own, equipped with adequate insurance expertise to ensure competent governance at the operating level.
A strong Great Eastern will benefit shareholders of both OCBC and Great Eastern.
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OCBC shouldn&rsquo t absorb Great Eastern entirely
AS A shareholder of OCBC, I am firmly of the view that it is not such a great idea for OCBC to absorb Great Eastern entirely. To do so would enhance the risk for OCBC as a bank and at the same time, inhibit the growth of Great Eastern as an insurer.
Basically, banking and insurance are two distinctively different types of business, each subject to entirely different underwriting considerations and approaches to risk management.
Given the increasingly higher risk in life insurance these days, with an aging population and the adverse impact of extreme weather conditions resulting from climate change on non-life business, Great Eastern must remain a strong and independent entity with a strong board of its own, equipped with adequate insurance expertise to ensure competent governance at the operating level.
A strong Great Eastern will benefit shareholders of both OCBC and Great Eastern.
sgdaud 1.115
The weakening of the Australian dollar (AUD) against the Singapore dollar (SGD) can be influenced by various factors, including economic fundamentals, market sentiment, and external developments. Here are some potential reasons why the Aussie dollar may have weakened significantly against the Singapore dollar:
- Interest Rate Differentials:
- Interest rate differentials between Australia and Singapore can impact currency exchange rates. If the Reserve Bank of Australia (RBA) lowers interest rates or maintains a dovish monetary policy stance while the Monetary Authority of Singapore (MAS) keeps rates stable or raises them, investors may favor holding Singapore dollar-denominated assets, leading to a strengthening of the SGD against the AUD.
- Economic Performance:
- Differences in economic performance between Australia and Singapore can affect currency valuations. Weakness in Australia' s economy, such as sluggish growth, high unemployment, or a slowdown in key sectors like mining or housing, may undermine confidence in the Aussie dollar relative to the Singapore dollar, especially if Singapore' s economy is perceived as stronger or more resilient.
- Commodity Prices:
- Australia is a major exporter of commodities such as iron ore, coal, and natural gas. Changes in commodity prices, particularly declines in prices for Australia' s key exports, can weigh on the Aussie dollar.
- A slowdown in global demand for commodities or shifts in market dynamics, such as increased supply from other producers, can contribute to a weakening of the AUD against the SGD.
- Market Sentiment and Risk Appetite:
- Changes in market sentiment and risk appetite can influence currency flows. During periods of risk aversion or heightened uncertainty, investors may seek safe-haven currencies like the Singapore dollar, leading to a relative strengthening of the SGD against riskier currencies like the AUD.
- Factors such as geopolitical tensions, trade disputes, or concerns about global economic growth can impact market sentiment and drive currency movements.
- Central Bank Policies:
- Policy decisions and communications from the RBA and MAS can affect currency exchange rates. Signals of monetary policy easing or tightening, as well as interventions in currency markets, can influence investor perceptions and currency valuations.
- Market expectations regarding future policy directions and the effectiveness of central bank actions can also play a role in currency movements.
- External Factors:
- Developments in other major currencies, such as the US dollar or the Chinese yuan, can indirectly impact the AUD/SGD exchange rate through their influence on global financial markets and investor behavior.
- Factors such as changes in trade patterns, capital flows, or geopolitical developments in the Asia-Pacific region may also influence the AUD/SGD exchange rate.
chartiskao ( Date: 07-May-2024 09:01) Posted:
https://www.smh.com.au/business/banking-and-finance/anz-boss-sees-stress-in-economy-as-bank-profits-slide-7-per-cent-20240507-p5fpfz.html
chartiskao ( Date: 07-May-2024 08:59) Posted:
https://finance.yahoo.com/news/anz-bank-unveils-share-buyback-214459914.html
https://www.marketindex.com.au/asx/anz
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https://www.smh.com.au/business/banking-and-finance/anz-boss-sees-stress-in-economy-as-bank-profits-slide-7-per-cent-20240507-p5fpfz.html
chartiskao ( Date: 07-May-2024 08:59) Posted:
https://finance.yahoo.com/news/anz-bank-unveils-share-buyback-214459914.html
https://www.marketindex.com.au/asx/anz
MrBear12 ( Date: 07-May-2024 08:43) Posted:
| Sell to a Big insurance corporation i think better value |
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https://finance.yahoo.com/news/anz-bank-unveils-share-buyback-214459914.html
https://www.marketindex.com.au/asx/anz
MrBear12 ( Date: 07-May-2024 08:43) Posted:
| Sell to a Big insurance corporation i think better value |
|
Sell to a Big insurance corporation i think better value
The decision for OCBC to absorb Great Eastern entirely would be a strategic and significant move, impacting both companies and their stakeholders. Here are some potential considerations and implications of such a decision:
- Synergies and Integration: Absorbing Great Eastern entirely would enable OCBC to fully integrate the insurance company into its operations. This could lead to synergies in areas such as distribution channels, product offerings, and customer service, potentially enhancing efficiency and competitiveness.
- Control and Governance: Owning Great Eastern entirely would give OCBC full control over the insurance company' s strategic direction, management, and governance. This could facilitate closer alignment of business strategies and priorities between the two entities.
- Financial Impact: The acquisition of Great Eastern would have financial implications for OCBC, including the cost of acquiring the remaining shares, potential changes in capital structure, and impact on financial performance metrics such as earnings per share and return on equity.
- Regulatory Approval: The acquisition would likely be subject to regulatory approval from relevant authorities, including banking and insurance regulators. The approval process could involve scrutiny of factors such as market competition, financial stability, and consumer protection.
- Diversification and Risk Management: Owning Great Eastern entirely could enhance OCBC' s diversification by increasing exposure to the insurance sector. This could potentially reduce reliance on the banking business and provide additional sources of revenue and earnings stability.
- Brand and Reputation: The acquisition could impact OCBC' s brand and reputation, depending on how the integration is managed and perceived by customers, employees, and investors. Effective communication and execution of the integration plan would be critical to maintaining stakeholder confidence.
- Strategic Focus: Absorbing Great Eastern entirely would require OCBC to allocate resources and management attention towards the insurance business. This could affect the bank' s strategic focus and priorities, potentially shifting emphasis away from other areas of the business.
- Market Reaction: The announcement of the acquisition could influence investor sentiment and market perceptions of OCBC' s growth prospects and strategic direction. The stock price of both OCBC and Great Eastern could react to the news, reflecting market expectations and investor sentiment.
https://thesmartinvestor.com.sg/dbs-uob-and-ocbc-which-of-these-3-banks-should-you-buy/
A bank' s low return on equity (ROE) can be influenced by various factors, both internal and external. Here are some potential reasons why a bank might have a low ROE:
- Low Net Interest Margin (NIM):
- Net interest margin is a key driver of profitability for banks, representing the difference between interest earned on loans and interest paid on deposits.
- A low NIM, resulting from factors such as low interest rates, intense competition, or an unfavorable interest rate environment, can reduce a bank' s profitability and ROE.
- High Operating Expenses:
- High operating expenses, including personnel costs, technology investments, and regulatory compliance expenses, can eat into a bank' s earnings and lower its ROE.
- Inefficient operations, legacy systems, or regulatory burdens may contribute to higher costs for the bank.
- Credit Quality Issues:
- Poor credit quality, such as a high level of non-performing loans (NPLs) or loan defaults, can negatively impact a bank' s profitability.
- Provisioning for loan losses can reduce a bank' s net income, leading to a lower ROE.
- Weak Asset Quality:
- A bank' s asset quality, including the quality of its loan portfolio and investment securities, can affect its profitability and ROE.
- Write-downs or impairments on assets, particularly during economic downturns or financial crises, can reduce a bank' s earnings.
- Capital Structure:
- A bank' s capital structure, including its leverage ratio and debt-to-equity ratio, can impact its ROE.
- Higher levels of debt or leverage can amplify returns but also increase financial risk, while a conservative capital structure may result in a lower ROE.
- Economic Environment:
- Macroeconomic factors, such as economic growth, inflation rates, and monetary policy, can influence a bank' s profitability and ROE.
- Weak economic conditions, low interest rates, or volatile financial markets may constrain a bank' s ability to generate high returns.
- Regulatory Constraints:
- Regulatory requirements, such as capital adequacy ratios, liquidity requirements, and compliance costs, can affect a bank' s profitability.
- Compliance with regulatory standards may involve additional costs and constraints on business activities, impacting ROE.
- Market Competition:
- Intense competition within the banking industry can put pressure on margins and profitability.
- Price competition for loans and deposits, as well as the emergence of non-traditional competitors such as fintech firms, can squeeze margins and reduce ROE.
chartiskao ( Date: 07-May-2024 04:50) Posted:
https://www.bloomberg.com/markets/rates-bonds/government-bonds/us
Cash, cash equivalents and short-term Treasurys at Buffett' s group totaled $189 billion at the end of March, up 13% from the end of 2023. " It' s a fair assumption that they' ll probably be at about $200 billion at the end of this quarter," Buffett said.1天 前
chartiskao ( Date: 07-May-2024 04:47) Posted:
| usdsgd 1.3513 vs
https://goldbroker.com/charts/gold-price/eur
https://goldbroker.com/charts/gold-price/cny
https://goldbroker.com/charts/gold-price/jpy
https://goldprice.org/gold-price-malaysia.html
https://goldprice.org/live-gold-price.html
https://goldprice.org/gold-price-indonesia.html
https://goldbroker.com/charts/gold-price/thb
https://goldbroker.com/charts/gold-price/php
https://goldbroker.com/charts/gold-price/vnd
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https://www.bloomberg.com/markets/rates-bonds/government-bonds/us
Cash, cash equivalents and short-term Treasurys at Buffett' s group totaled $189 billion at the end of March, up 13% from the end of 2023. " It' s a fair assumption that they' ll probably be at about $200 billion at the end of this quarter," Buffett said.1天 前
chartiskao ( Date: 07-May-2024 04:47) Posted:
| usdsgd 1.3513 vs
https://goldbroker.com/charts/gold-price/eur
https://goldbroker.com/charts/gold-price/cny
https://goldbroker.com/charts/gold-price/jpy
https://goldprice.org/gold-price-malaysia.html
https://goldprice.org/live-gold-price.html
https://goldprice.org/gold-price-indonesia.html
https://goldbroker.com/charts/gold-price/thb
https://goldbroker.com/charts/gold-price/php
https://goldbroker.com/charts/gold-price/vnd
chartiskao ( Date: 07-May-2024 04:39) Posted:
A QUESTION was raised at OCBC&rsquo s annual general meeting (AGM) this past week about how the group&rsquo s 88.4 per cent stake in Great Eastern may have contributed to the low trading liquidity and weak market value of the insurer&rsquo s shares.
OCBC&rsquo s chairman Andrew Lee responded by noting that Great Eastern&rsquo s public float has been low for a long time. He added: &ldquo OCBC is not in the business of providing liquidity for another company.&rdquo
Lee went on to reiterate the importance of Great Eastern to OCBC. He referred to the insurer as a &ldquo strategic pillar&rdquo that OCBC is building on, and said collaboration across the group has increased.
What do OCBC and its shareholders get out of all this? &ldquo The increase of dividends from Great Eastern &hellip is reflected in the payout of our dividends and our share price,&rdquo Lee said.
&ldquo We have no direct interest in stimulating Great Eastern&rsquo s liquidity or share price,&rdquo he added.
For me, these comments by OCBC&rsquo s chairman plainly summed up why Great Eastern&rsquo s shares &ndash which closed Friday (May 3) at S$18.30 &ndash are trading at a steep discount to the insurer&rsquo s embedded value as at Dec 31 of S$36.59 per share.
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There is a fundamental misalignment of interest between Great Eastern&rsquo s controlling shareholder and minority investors. While minority investors see value in Great Eastern&rsquo s shares, OCBC has no incentive to take any action to boost the insurer&rsquo s share price.
On the face of it, this is bad news for the minority shareholders of Great Eastern who have been campaigning to unlock value at the insurer. Led by a former remisier named Ong Chin Woo, these activist shareholders tried and failed to put forward three resolutions at Great Eastern&rsquo s recent AGM to address its weak share price.
With Great Eastern&rsquo s controlling shareholder now firmly stating that it will do nothing to help their cause, is the game over?
OCBC&rsquo s trailing ROE
My own observation is that the dissident minority shareholders of Great Eastern have not given up and that they understood from the outset that OCBC would not easily consent to value unlocking initiatives at its insurance arm.
OCBC&rsquo s clear statement last week that it will do nothing directly to boost the market value of Great Eastern&rsquo s shares may have been exactly the reaction the activist minorities wanted to elicit.
In the months ahead, it seems likely to me that they will continue challenging OCBC&rsquo s narrative about the ownership of a large stake in Great Eastern being crucial to its own performance. This could mobilise OCBC&rsquo s own shareholders to begin agitating for change too.
OCBC casts itself as a venerable financial conglomerate, with Great Eastern as one of its many parts. Yet, it has the lowest return on equity (ROE) among the three local banks.
OCBC reported an ROE of 13.7 per cent for 2023, trailing DBS&rsquo 18 per cent and UOB&rsquo s 14.2 per cent.
The debate on whether OCBC needs to restructure itself, and how it should go about doing so, may draw wide interest among institutional investors.
OCBC has a more than 15.4 per cent weighting in the MSCI Singapore index, while the three Singapore banks have a combined weighting of more than 50.3 per cent.
Three options for OCBC
What exactly could OCBC do to address the undervaluation of Great Eastern&rsquo s shares in the market? There are three options, in my view, each with their pros and cons.
One is for Great Eastern to be sold. This seems most unlikely to me, given how strongly OCBC has made the case for holding a major stake in the insurer over the last two decades.
The interests of Great Eastern&rsquo s controlling shareholder and its minorities would be completely aligned in the event of a sale, though &ndash they would all want to maximise the sale price.
Another option would be for OCBC to distribute a major portion of its stake in Great Eastern to its own shareholders. If OCBC were to retain a 20 per cent stake in the insurer and distribute the balance, its shareholders would receive roughly 70 Great Eastern shares for every 1,000 OCBC shares they hold.
This would enable OCBC to keep Great Eastern in its fold, while significantly improving the insurer&rsquo s public float.
One uncertainty, however, is how high a market valuation Great Eastern&rsquo s shares would garner with the increased public float. It is also likely that many small shareholders of OCBC will be left holding odd lots of Great Eastern shares.
The third option would be for OCBC to try once again to purchase all the shares it does not already own in Great Eastern. This would provide OCBC with full ownership of its insurance business, and remove minority shareholders of Great Eastern from the picture.
The drawback here is that the very low market valuation of Great Eastern&rsquo s shares currently would make it tricky to set an offer price that would be acceptable to Great Eastern&rsquo s minority shareholders as well as fair to shareholders of OCBC.
Remuneration policy gripes
This brings me to the matter of Great Eastern&rsquo s top executives receiving a portion of their remuneration in the form of OCBC shares rather than Great Eastern shares.
The board of Great Eastern ought to realise that this much-criticised practice has become a stick that minority shareholders will beat them with whenever they are unhappy about something.
Instead of defending themselves from these beatings by reciting group spirit-fostering reasons for the remuneration policy, Great Eastern&rsquo s board and management ought to take that stick away from minority shareholders by purchasing some shares in the public-listed company they run.
Great Eastern&rsquo s chairman and chief executive could immediately pledge that they will each invest a significant proportion &ndash say, one-third &ndash of their total remuneration every year in Great Eastern shares.
This will not fix the misalignment of interest between Great Eastern&rsquo s controlling shareholder and its minority investors, of course. But it would put the individuals at the helm of Great Eastern in a stronger moral position as they engage with minority shareholders.
It would also provide some assurance to the market that Great Eastern&rsquo s board and top management are incentivised to grow its business and increase its market value for the benefit of all its shareholders.
The writer owns shares in Great Eastern and OCBC.
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usdsgd 1.3513 vs
https://goldbroker.com/charts/gold-price/eur
https://goldbroker.com/charts/gold-price/cny
https://goldbroker.com/charts/gold-price/jpy
https://goldprice.org/gold-price-malaysia.html
https://goldprice.org/live-gold-price.html
https://goldprice.org/gold-price-indonesia.html
https://goldbroker.com/charts/gold-price/thb
https://goldbroker.com/charts/gold-price/php
https://goldbroker.com/charts/gold-price/vnd
chartiskao ( Date: 07-May-2024 04:39) Posted:
A QUESTION was raised at OCBC&rsquo s annual general meeting (AGM) this past week about how the group&rsquo s 88.4 per cent stake in Great Eastern may have contributed to the low trading liquidity and weak market value of the insurer&rsquo s shares.
OCBC&rsquo s chairman Andrew Lee responded by noting that Great Eastern&rsquo s public float has been low for a long time. He added: &ldquo OCBC is not in the business of providing liquidity for another company.&rdquo
Lee went on to reiterate the importance of Great Eastern to OCBC. He referred to the insurer as a &ldquo strategic pillar&rdquo that OCBC is building on, and said collaboration across the group has increased.
What do OCBC and its shareholders get out of all this? &ldquo The increase of dividends from Great Eastern &hellip is reflected in the payout of our dividends and our share price,&rdquo Lee said.
&ldquo We have no direct interest in stimulating Great Eastern&rsquo s liquidity or share price,&rdquo he added.
For me, these comments by OCBC&rsquo s chairman plainly summed up why Great Eastern&rsquo s shares &ndash which closed Friday (May 3) at S$18.30 &ndash are trading at a steep discount to the insurer&rsquo s embedded value as at Dec 31 of S$36.59 per share.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
There is a fundamental misalignment of interest between Great Eastern&rsquo s controlling shareholder and minority investors. While minority investors see value in Great Eastern&rsquo s shares, OCBC has no incentive to take any action to boost the insurer&rsquo s share price.
On the face of it, this is bad news for the minority shareholders of Great Eastern who have been campaigning to unlock value at the insurer. Led by a former remisier named Ong Chin Woo, these activist shareholders tried and failed to put forward three resolutions at Great Eastern&rsquo s recent AGM to address its weak share price.
With Great Eastern&rsquo s controlling shareholder now firmly stating that it will do nothing to help their cause, is the game over?
OCBC&rsquo s trailing ROE
My own observation is that the dissident minority shareholders of Great Eastern have not given up and that they understood from the outset that OCBC would not easily consent to value unlocking initiatives at its insurance arm.
OCBC&rsquo s clear statement last week that it will do nothing directly to boost the market value of Great Eastern&rsquo s shares may have been exactly the reaction the activist minorities wanted to elicit.
In the months ahead, it seems likely to me that they will continue challenging OCBC&rsquo s narrative about the ownership of a large stake in Great Eastern being crucial to its own performance. This could mobilise OCBC&rsquo s own shareholders to begin agitating for change too.
OCBC casts itself as a venerable financial conglomerate, with Great Eastern as one of its many parts. Yet, it has the lowest return on equity (ROE) among the three local banks.
OCBC reported an ROE of 13.7 per cent for 2023, trailing DBS&rsquo 18 per cent and UOB&rsquo s 14.2 per cent.
The debate on whether OCBC needs to restructure itself, and how it should go about doing so, may draw wide interest among institutional investors.
OCBC has a more than 15.4 per cent weighting in the MSCI Singapore index, while the three Singapore banks have a combined weighting of more than 50.3 per cent.
Three options for OCBC
What exactly could OCBC do to address the undervaluation of Great Eastern&rsquo s shares in the market? There are three options, in my view, each with their pros and cons.
One is for Great Eastern to be sold. This seems most unlikely to me, given how strongly OCBC has made the case for holding a major stake in the insurer over the last two decades.
The interests of Great Eastern&rsquo s controlling shareholder and its minorities would be completely aligned in the event of a sale, though &ndash they would all want to maximise the sale price.
Another option would be for OCBC to distribute a major portion of its stake in Great Eastern to its own shareholders. If OCBC were to retain a 20 per cent stake in the insurer and distribute the balance, its shareholders would receive roughly 70 Great Eastern shares for every 1,000 OCBC shares they hold.
This would enable OCBC to keep Great Eastern in its fold, while significantly improving the insurer&rsquo s public float.
One uncertainty, however, is how high a market valuation Great Eastern&rsquo s shares would garner with the increased public float. It is also likely that many small shareholders of OCBC will be left holding odd lots of Great Eastern shares.
The third option would be for OCBC to try once again to purchase all the shares it does not already own in Great Eastern. This would provide OCBC with full ownership of its insurance business, and remove minority shareholders of Great Eastern from the picture.
The drawback here is that the very low market valuation of Great Eastern&rsquo s shares currently would make it tricky to set an offer price that would be acceptable to Great Eastern&rsquo s minority shareholders as well as fair to shareholders of OCBC.
Remuneration policy gripes
This brings me to the matter of Great Eastern&rsquo s top executives receiving a portion of their remuneration in the form of OCBC shares rather than Great Eastern shares.
The board of Great Eastern ought to realise that this much-criticised practice has become a stick that minority shareholders will beat them with whenever they are unhappy about something.
Instead of defending themselves from these beatings by reciting group spirit-fostering reasons for the remuneration policy, Great Eastern&rsquo s board and management ought to take that stick away from minority shareholders by purchasing some shares in the public-listed company they run.
Great Eastern&rsquo s chairman and chief executive could immediately pledge that they will each invest a significant proportion &ndash say, one-third &ndash of their total remuneration every year in Great Eastern shares.
This will not fix the misalignment of interest between Great Eastern&rsquo s controlling shareholder and its minority investors, of course. But it would put the individuals at the helm of Great Eastern in a stronger moral position as they engage with minority shareholders.
It would also provide some assurance to the market that Great Eastern&rsquo s board and top management are incentivised to grow its business and increase its market value for the benefit of all its shareholders.
The writer owns shares in Great Eastern and OCBC.
MrBear12 ( Date: 03-May-2024 06:15) Posted:
https://www.google.com/amp/s/www.theedgesingapore.com/amp/news/banking-finance/ocbc-completes-acquisition-pt-bank-commonwealth
Another 100bn bank in the making?
Akan datang |
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A QUESTION was raised at OCBC&rsquo s annual general meeting (AGM) this past week about how the group&rsquo s 88.4 per cent stake in Great Eastern may have contributed to the low trading liquidity and weak market value of the insurer&rsquo s shares.
OCBC&rsquo s chairman Andrew Lee responded by noting that Great Eastern&rsquo s public float has been low for a long time. He added: &ldquo OCBC is not in the business of providing liquidity for another company.&rdquo
Lee went on to reiterate the importance of Great Eastern to OCBC. He referred to the insurer as a &ldquo strategic pillar&rdquo that OCBC is building on, and said collaboration across the group has increased.
What do OCBC and its shareholders get out of all this? &ldquo The increase of dividends from Great Eastern &hellip is reflected in the payout of our dividends and our share price,&rdquo Lee said.
&ldquo We have no direct interest in stimulating Great Eastern&rsquo s liquidity or share price,&rdquo he added.
For me, these comments by OCBC&rsquo s chairman plainly summed up why Great Eastern&rsquo s shares &ndash which closed Friday (May 3) at S$18.30 &ndash are trading at a steep discount to the insurer&rsquo s embedded value as at Dec 31 of S$36.59 per share.
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There is a fundamental misalignment of interest between Great Eastern&rsquo s controlling shareholder and minority investors. While minority investors see value in Great Eastern&rsquo s shares, OCBC has no incentive to take any action to boost the insurer&rsquo s share price.
On the face of it, this is bad news for the minority shareholders of Great Eastern who have been campaigning to unlock value at the insurer. Led by a former remisier named Ong Chin Woo, these activist shareholders
tried and
failed to put forward three resolutions at Great Eastern&rsquo s recent AGM to address its weak share price.
With Great Eastern&rsquo s controlling shareholder now firmly stating that it will do nothing to help their cause, is the game over?
OCBC&rsquo s trailing ROE
My own observation is that the dissident minority shareholders of Great Eastern have not given up and that they understood from the outset that OCBC would not easily consent to value unlocking initiatives at its insurance arm.
OCBC&rsquo s clear statement last week that it will do nothing directly to boost the market value of Great Eastern&rsquo s shares may have been exactly the reaction the activist minorities wanted to elicit.
In the months ahead, it seems likely to me that they will continue challenging OCBC&rsquo s narrative about the ownership of a large stake in Great Eastern being crucial to its own performance. This could mobilise OCBC&rsquo s own shareholders to begin agitating for change too.
OCBC casts itself as
a venerable financial conglomerate, with Great Eastern as one of its many parts. Yet, it has the lowest return on equity (ROE) among the three local banks.
OCBC reported an ROE of 13.7 per cent for 2023, trailing DBS&rsquo 18 per cent and UOB&rsquo s 14.2 per cent.
The debate on whether OCBC needs to restructure itself, and how it should go about doing so, may draw wide interest among institutional investors.
OCBC has a more than 15.4 per cent weighting in the MSCI Singapore index, while the three Singapore banks have a combined weighting of more than 50.3 per cent.
Three options for OCBC
What exactly could OCBC do to address the undervaluation of Great Eastern&rsquo s shares in the market? There are three options, in my view, each with their pros and cons.
One is for Great Eastern to be sold. This seems most unlikely to me, given how strongly OCBC has made the case for holding a major stake in the insurer over the last two decades.
The interests of Great Eastern&rsquo s controlling shareholder and its minorities would be completely aligned in the event of a sale, though &ndash they would all want to maximise the sale price.
Another option would be for OCBC to distribute a major portion of its stake in Great Eastern to its own shareholders. If OCBC were to retain a 20 per cent stake in the insurer and distribute the balance, its shareholders would receive roughly 70 Great Eastern shares for every 1,000 OCBC shares they hold.
This would enable OCBC to keep Great Eastern in its fold, while significantly improving the insurer&rsquo s public float.
One uncertainty, however, is how high a market valuation Great Eastern&rsquo s shares would garner with the increased public float. It is also likely that many small shareholders of OCBC will be left holding odd lots of Great Eastern shares.
The third option would be for OCBC to try once again to purchase all the shares it does not already own in Great Eastern. This would provide OCBC with full ownership of its insurance business, and remove minority shareholders of Great Eastern from the picture.
The drawback here is that the very low market valuation of Great Eastern&rsquo s shares currently would make it tricky to set an offer price that would be acceptable to Great Eastern&rsquo s minority shareholders as well as fair to shareholders of OCBC.
Remuneration policy gripes
This brings me to the matter of Great Eastern&rsquo s top executives receiving a portion of their remuneration in the form of OCBC shares rather than Great Eastern shares.
The board of Great Eastern ought to realise that this much-criticised practice has become a stick that minority shareholders will beat them with whenever they are unhappy about something.
Instead of defending themselves from these beatings by reciting
group spirit-fostering reasons for the remuneration policy, Great Eastern&rsquo s board and management ought to take that stick away from minority shareholders by purchasing some shares in the public-listed company they run.
Great Eastern&rsquo s chairman and chief executive could immediately pledge that they will each invest a significant proportion &ndash say, one-third &ndash of their total remuneration every year in Great Eastern shares.
This will not fix the misalignment of interest between Great Eastern&rsquo s controlling shareholder and its minority investors, of course. But it would put the individuals at the helm of Great Eastern in a stronger moral position as they engage with minority shareholders.
It would also provide some assurance to the market that Great Eastern&rsquo s board and top management are incentivised to grow its business and increase its market value for the benefit of all its shareholders.
The writer owns shares in Great Eastern and OCBC.
MrBear12 ( Date: 03-May-2024 06:15) Posted:
https://www.google.com/amp/s/www.theedgesingapore.com/amp/news/banking-finance/ocbc-completes-acquisition-pt-bank-commonwealth
Another 100bn bank in the making?
Akan datang |
|
https://www.google.com/amp/s/www.theedgesingapore.com/amp/news/banking-finance/ocbc-completes-acquisition-pt-bank-commonwealth
Another 100bn bank in the making?
Akan datang
Of course,
Chairman sets the direction based on the board' s vision. Articulates more with his mouth.
CEO executes that vision. Works more with her hands.
moonsun ( Date: 02-May-2024 16:57) Posted:
Curious? lee is chairnan ? Why ceo keep quiet ?
Why reports more on chairman lee than ceo helen ?
Hmmm. |
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