■ Briefing key takeaways:
(1) Loan growth could potentially surpass high single-digit target,
(2) NIM was flat in 1Q 2018 but expected to gradually rise in coming quarters,
(3) GE's contribution to OCBC benefitted from the new accounting policy,
(4) New NPA formation expected to be in S$300 mn level (< 50 bp of loans) and credit cost is expected to be in the 15-20 bp range 50 bp of loans) and credit cost is expected to be in the 15-20 bp range.
■ Raise profit estimates and price target: We raise 2018-20 net profit estimates by 1-3% to factor in (1) higher loan growth, (2) better NIM, and (3) lower credit cost. However, this was partially mitigated as we lowered NOII growth estimates. Our 2018-20 ROE estimates are revised up to 12.2-12.3% vs 11.8-12.1% previously. Our price target (based on Gordon Growth model) is raised to S$15.10 (from S$14.70).
Source : Credit Suisse Asia Pacific Equity Research