Accumulator for OCBC
OCBC is the second largest financial services group in Southeast Asia and worth over S$50 billion in market capitalization.
Recent pullback in OCBC offers good opportunity to do accumulator on OCBC.
Rationale:
1. The bank’s net interest income grew 11% year-on-year to S$1.42 billion in 2018’s first quarter, driven by improvement in its net interest margin, and loans growth. Moreover, the growth was broad-based across industries as well as geographical segments.
2. In general, a lower cost-to-income ratio is preferred. Non-interest income increased by 8% to S$918 million, due to a 19% rise in wealth management fee income, and higher brokerage, fund management, and loan-related activities.
3. The cost-to-income ratio fell from 45.9% to 44.2% as a result of OCBC’s scale and effective cost management.
4. The annualised return on equity (ROE) for the bank improved from 9.6% a year ago to 11.8% 2018’s first quarter.
5. CEO Samuel Tsien has identified key global trends shaping Asia's growth and OCBC is well positioned to take advantage of:
• Intra-asia trade and cross border capital flows.
• Rising Asian wealth.
• Urbanisation and continued rise of small and medium size enterprises in Asia.
• Increasing economic presence of China.
• Advancement in technology.
6. Investing bank stock can hedge portfolio from interest rate risk.
Accumulator quote:
Underlying: OCBC
Guaranteed: 1 month
Strike: 92.55%
Knock out: 105%
Tenor: 12 months
Biweekly settlement
No of days: 249
Recent pullback in OCBC offers good opportunity to do accumulator on OCBC.
Rationale:
1. The bank’s net interest income grew 11% year-on-year to S$1.42 billion in 2018’s first quarter, driven by improvement in its net interest margin, and loans growth. Moreover, the growth was broad-based across industries as well as geographical segments.
2. In general, a lower cost-to-income ratio is preferred. Non-interest income increased by 8% to S$918 million, due to a 19% rise in wealth management fee income, and higher brokerage, fund management, and loan-related activities.
3. The cost-to-income ratio fell from 45.9% to 44.2% as a result of OCBC’s scale and effective cost management.
4. The annualised return on equity (ROE) for the bank improved from 9.6% a year ago to 11.8% 2018’s first quarter.
5. CEO Samuel Tsien has identified key global trends shaping Asia's growth and OCBC is well positioned to take advantage of:
• Intra-asia trade and cross border capital flows.
• Rising Asian wealth.
• Urbanisation and continued rise of small and medium size enterprises in Asia.
• Increasing economic presence of China.
• Advancement in technology.
6. Investing bank stock can hedge portfolio from interest rate risk.
Accumulator quote:
Underlying: OCBC
Guaranteed: 1 month
Strike: 92.55%
Knock out: 105%
Tenor: 12 months
Biweekly settlement
No of days: 249
The discussion about the accumulator here is very useful. Even though it is not the main topic but the information and ideas presented are very useful.
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