MENU

Is OCBC Singapore’s Fastest-Growing Bank?

ocbcOversea-Chinese Banking Corporation (SGX: O39) has certainly set tongues a wagging with its proposed acquisition of Hong Kong’s Wing Hang Bank (SEHK: 302) for $4.95b.

OCBC is certainly no stranger to China. It already has S$33b, or a tenth, of its assets parked in Greater China. The planned acquisition could boost that by another S$34b to around 18% of its total assets. In other words, OCBC could nearly double its exposure to one of the fastest-growing economies in the world.

OCBC is currently forecast to post profits of S$0.83 per share this year. That is before any possible contributions from Wing Hang are factored in. The forecast would represent an increase of 6% on last year’s earnings. By comparison, earnings at DBS (SGX: D05) are expected to rise 5% to S$1.55, while profits at UOB (SGX: U11) could improve 2%.

On the face of it, OCBC looks to be Singapore’s fast-growing bank. But at S$9.69, the bank is valued at about 12 times forecast earnings. DBS shares, which cost S$16.54 a pop, would value Singapore’s largest bank at around 10 times forward earnings. Meanwhile, UOB’s share price of S$21.80 would put it on a forward price-to-earnings ratio of 11.4.

The numbers would appear to suggest that OCBC profit growth could marginally outpace DBS and streak ahead of UOB. But investors could be paying a premium for the expected growth.

The Motley Fool's purpose is to help the world invest, better. Click here now for your FREE subscription to Take Stock -- Singapore, The Motley Fool's free investing newsletter. Written by David Kuo, Take Stock -- Singapore tells you exactly what's happening in today's markets, and shows how you can GROW your wealth in the years ahead.

Like us on Facebook to keep up-to-date with our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.