Equity Long-Short

Mo Aziz

Equity Bottom-Up

<ul>
<li>OCBC built credit costs 6bp above its trailing run-rate in 1Q26. We read it as front-loading inside guidance. One 2Q26 data point confirms or changes that view.</li>
<li>OCBC discloses less about its overlay than DBS: neither the quarterly amount nor the cumulative stock is separately quantified. A reserve with no disclosed size has no auditable direction.</li>
<li>At S$28.69 OCBC trades at a 45% premium to GGM-justified book on a 13% ROE. DBS's 43% premium runs on 17%. Same multiple. 400bp less ROE.</li>
</ul>


OCBC built credit costs 6bp above its trailing run-rate in 1Q26. We read it as front-loading inside guidance. One 2Q26 data point confirms or changes that view.
OCBC discloses less about its overlay than DBS: neither the quarterly amount nor the cumulative stock is separately quantified. A reserve with no disclosed size has no auditable direction.
At S$28.69 OCBC trades at a 45% premium to GGM-justified book on a 13% ROE. DBS's 43% premium runs on 17%. Same multiple. 400bp less ROE.


OCBC SP: Accounting Forensics Affirms High Quality Earnings, but Overlay Transparency Is Below DBS

<ul>
<li>Management confirmed ~S$800m still unutilised under the buyback programme may convert to a special dividend by end-FY26 — a dated, binary catalyst the market has partly but not fully priced.</li>
<li>1Q26 net profit rose 5% YoY to S$1.97bn, 5% above consensus: a 34% jump in wealth fees and record non-interest income offset 28bp of NIM compression to 1.76%.</li>
<li>Our fair value of SG$29.50, derived by Gordon Growth implies 7.5% UPSIDE potential, which is normal, but combined with DPS it spikes to ~11% upside potential. </li>
</ul>


Management confirmed ~S$800m still unutilised under the buyback programme may convert to a special dividend by end-FY26 — a dated, binary catalyst the market has partly but not fully priced.
1Q26 net profit rose 5% YoY to S$1.97bn, 5% above consensus: a 34% jump in wealth fees and record non-interest income offset 28bp of NIM compression to 1.76%.
Our fair value of SG$29.50, derived by Gordon Growth implies 7.5% UPSIDE potential, which is normal, but combined with DPS it spikes to ~11% upside potential. 


Oversea-Chinese Banking Corp (OCBC SP): The S$800M Swing Factor, Capital Return Optionality in FY26

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

<ul>
<li>Singapore domestic credit growth is expanding upward over several months, where there are positive implications for net interest income growth</li>
<li>Growth of local loans was negative YoY in past months last year, so the delta pick up of net interest income can be strong</li>
<li>Accelerating growth likely means better credit metrics, and this is what MAS data shows too; this means that credit costs can come in, improving profit growth</li>
</ul>


Singapore domestic credit growth is expanding upward over several months, where there are positive implications for net interest income growth
Growth of local loans was negative YoY in past months last year, so the delta pick up of net interest income can be strong
Accelerating growth likely means better credit metrics, and this is what MAS data shows too; this means that credit costs can come in, improving profit growth


Singapore Banks - Domestic Credit Growth Rising Substantially, Credit Cost May Follow With A Decline

Product Marketing Manager, Criat

Raghav Chandra Mathur

Product Marketing Manager

Next-Generation Credit Analytics Provider

Criat

Criat specializes in new-generation data-driven credit analytics. Leveraging our industry-leading DeepCredit analytical technologies, we produce daily-updated forward-looking credit assessment and valuation to help financial institutions stay ahead of risks. Coupled with use-case-driven applications, we extract insights, answer questions and enable smarter credit decisions.

<ul><li>Insurers domiciled in Advanced Asian Economies have reaped the benefits of the higher-for-longer interest rate environment that has buoyed profitability for the sub-sector, even though operational headwinds and policy uncertainty remain key challenges for the sector in the latter half of the year.</li><li>Suffice to say the trend in Insurers’ credit risk profiles, measured using Criat’s Credit Cycle Indices (CCCIs), has been non-homogenous across the continent with firms domiciled in economies such as South Korea and Hong Kong facing a substantially higher risk than those domiciled in Singapore, Japan, and Taiwan.</li><li>Strong net investment returns over the past year have helped boost profitability for most of the sub-sector that has increased its exposure to government securities. </li></ul>

Insurers domiciled in Advanced Asian Economies have reaped the benefits of the higher-for-longer interest rate environment that has buoyed profitability for the sub-sector, even though operational headwinds and policy uncertainty remain key challenges for the sector in the latter half of the year.Suffice to say the trend in Insurers’ credit risk profiles, measured using Criat’s Credit Cycle Indices (CCCIs), has been non-homogenous across the continent with firms domiciled in economies such as South Korea and Hong Kong facing a substantially higher risk than those domiciled in Singapore, Japan, and Taiwan.Strong net investment returns over the past year have helped boost profitability for most of the sub-sector that has increased its exposure to government securities. 

Leaders and Laggards in Advanced Asia-Domiciled Insurance Sector

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Since the resumption of trading on the 21st August 2025, insurance play <a href="https://www.smartkarma.com/entities/great-eastern-holdings-limited" target="_blank" data-smartkarma-citation="entities:13993:1" rel="noopener">Great Eastern (GE SP)</a>, currently trading at S$15.65/share, is up ~30% from its suspended price. Not including dividends.</li>
<li>That's well adrift of the S$30.15/share Exit Offer from <a href="https://www.smartkarma.com/entities/oversea-chinese-banking-corporation-limited" target="_blank" data-smartkarma-citation="entities:114:1" rel="noopener">OCBC Bank (OCBC SP)</a> that was voted down by minority shareholders on the 8th July 2025. </li>
<li>
<a href="https://links.sgx.com/FileOpen/20260506%20GEH%20Media%20Release.ashx?App=Announcement&amp;FileID=887690" target="_blank" rel="noopener"> 1Q26 profit</a> remained steady year-on-year "despite less favourable investment environment". Sales and new business embedded value increased 16% and 31% yoy. </li>
</ul>


Since the resumption of trading on the 21st August 2025, insurance play Great Eastern (GE SP), currently trading at S$15.65/share, is up ~30% from its suspended price. Not including dividends.
That's well adrift of the S$30.15/share Exit Offer from OCBC Bank (OCBC SP) that was voted down by minority shareholders on the 8th July 2025. 

 1Q26 profit remained steady year-on-year "despite less favourable investment environment". Sales and new business embedded value increased 16% and 31% yoy. 


Great Eastern (GE SP): Economic Insurance

Singapore

OCBC Bank is a Singaporean multinational banking and financial services corporation. It offers a comprehensive suite of services including consumer, corporate, investment, and private banking, alongside insurance, asset management, and stockbroking. The company is headquartered in Singapore and was founded on October 31, 1932.

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OCBC Bank (OCBC SP)

OCBC SP: Accounting Forensics Affirms High Quality Earnings, but Overlay Transparency Is Below DBS

Conservative quarter, opaque overlay. OCBC discloses less about its reserve than DBS. At S$28.69: 45% premium to justified book on 13% ROE — same...

Mo Aziz

Oversea-Chinese Banking Corp (OCBC SP): The S$800M Swing Factor, Capital Return Optionality in FY26

Management may convert unutilised buyback funds to special dividend by end-FY26, 1Q26 net profit rose 5% YoY, fair value implies 7.5% upside...

Mo Aziz

Singapore Banks - Domestic Credit Growth Rising Substantially, Credit Cost May Follow With A Decline

Domestic credit growth in Singaporeis uplifting for several months, the rate of growth acceleration in latest month, is strong. Positive...

Daniel Tabbush

Leaders and Laggards in Advanced Asia-Domiciled Insurance Sector

Insurers domiciled in Advanced Asian Economies have reaped the benefits of the higher-for-longer interest rate environment that has buoyed...

Criat

Great Eastern (GE SP): Economic Insurance

GE has underperformed peers/index since relisting. Liquidity constraints aside, GE has slightly higher payout & op margins v. peers. I'd be picking...

David Blennerhassett

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OCBC SP: Accounting Forensics Affirms High Quality Earnings, but Overlay Transparency Is Below DBS

Conservative quarter, opaque overlay. OCBC discloses less about its reserve than DBS. At S$28.69: 45% premium to justified book on 13% ROE — same...

Mo Aziz

Oversea-Chinese Banking Corp (OCBC SP): The S$800M Swing Factor, Capital Return Optionality in FY26

​Management may convert unutilised buyback funds to special dividend by end-FY26, 1Q26 net profit rose 5% YoY, fair value implies 7.5% upside...

Mo Aziz

Singapore Banks - Domestic Credit Growth Rising Substantially, Credit Cost May Follow With A Decline

Domestic credit growth in Singaporeis uplifting for several months, the rate of growth acceleration in latest month, is strong. Positive...

Daniel Tabbush

Leaders and Laggards in Advanced Asia-Domiciled Insurance Sector

Insurers domiciled in Advanced Asian Economies have reaped the benefits of the higher-for-longer interest rate environment that has buoyed...

Criat

Great Eastern (GE SP): Economic Insurance

GE has underperformed peers/index since relisting. Liquidity constraints aside, GE has slightly higher payout & op margins v. peers. I'd be picking...

David Blennerhassett

Management may convert unutilised buyback funds to special dividend by end-FY26, 1Q26 net profit rose 5% YoY, fair value implies 7.5% upside...