💫Since announcing better than expected 3Q earnings on 7 Nov 2025, OCBC has rallied as much as 8.8% within three days to a new record high of $18.71 on 12 Nov
📊 $OCBC Bank(O39.SI)$ ‘s share price move has outperformed counterparts DBS and UOB’s post-earnings share price moves of +3.8% and -3.4% respectively
❓Why has OCBC outperformed the other two banks, and more importantly, does it have more room to run?
📝Macquarie Research (MQ) breaks down OCBC’s latest earnings in a research report on 7 Nov and explain why it is now their preference amongst the three banks
Key points
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OCBC's 3Q25 result beat consensus by around 8%. Strong Non-Interest Income and asset quality drove the beat. The bank had the best wealth momentum
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Whilst questions on capital management remain, there is good optionality. The 60% payout remains for now (relative to DBS which is more than 80% in 2026
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MQ upgrades OCBC to Outperform with a S$19.90/share price target. OCBC's P/B and P/E relative discount versus DBS is the widest in at least a decade.
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Strong Non-Interest Income drove the beat. All Non-Interest Income lines were solid: fee income, insurance income and trading income (both customer flow and own account). OCBC's wealth momentum, measured by fee growth and AUM increase, was the highest amongst peers, setting a strong base for 26e. The bank also beat on asset quality and retained peer-leading NPL and coverage ratios.
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Relative valuation appeal. Despite similarly strong trends on wealth, non-interest income and asset quality as DBS, the valuation gap between DBS and OCBC has widened to its highest point in at least a decade with DBS at a 90% price to book premium and 40% price to earnings premium.
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Capital management optionality. OCBC has the same capital strength as DBS (fully-loaded CET-1 ratios at 15.0-15.1%) and Return on Risk-Weighted Assets (3.2-3.3% per the last quarter annualised) but investors are concerned with less clarity on the pathway for dividends. As of now, OCBC has committed to a full year 2025 60% payout and a baseline of 50%; MQ thinks this presents optionality in early 2026
Earnings changes: MQ raises their PATMI assumptions by 4-9% in 25e-27e led by higher fees and a lower, sustained credit charge
Valuation: MQ retains their S$18.18 share price target (based on a Price-to-Book stock methodology) which reflects 12.5% return on total equity, 10% cost of capital and 1% long-term growth.
Catalysts: OCBC's new CEO-designate, Tan Teck Long, was recently announced and will officially take charge at the start of 2026
Note:Macquarie Research is independent from the Warrants business, what the Macquarie Warrants desks quote from Macquarie Research may not reflect the complete analysis of Macquarie Research on the relevant company over time.
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This morning, Macquarie listed new call and put warrants tracking OCBC shares. Investors keen to capitalise on the volatility of OCBC may wish to consider using them to do so. They are priced around 4 to 5 Singapore cents and will move approximately 5.5 to 7 times more than OCBC shares.
Interested investors can use the Exposure Simulator tool to estimate the warrant price performance of any of the warrants based on your target exit levels in the stocks.
Trending OCBC call $OCBC Bk MB eCW260630(OAEW.SI)$: https://warrants.com.sg/tools/exposuresimulator/OAEW
Trending OCBC put $OCBC Bk MB ePW260630(UVTW.SI)$: https://warrants.com.sg/tools/exposuresimulator/UVTW
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