Maybank Kim Eng is maintaining its “sell” call on OCBC with $7.20 target price after it announced the acquisition of the wealth and investment business of Barclays Bank in Singapore and Hong Kong.
In a Thursday note, Maybank says while the acquisition provides an opportunity for OCBC to broaden and complement its wealth management franchise in Singapore and Greater China, it believes topline growth will slow and non-performing loans could rise from the oil & gas support services segment.
OCBC announced that its private banking arm, Bank of Singapore, will acquire Barclays’ wealth and investment management business in Singapore and Hong Kong for an indicative purchase price of US$320 million ($434 million).
With an AUM of US$18.3 billion as of Dec 2015, this translates to price/AUM of 1.72% in line with what DBS paid for Societe Generale’s Asian Private Bank business in 2014. Total AUM will increase by a third from US$55 billion to US$73.3 billion.
This will move it up into one of the top 10 Asia private wealth banks - slightly behind DBS (AUM: US$75 billion).
OCBC expects the acquisition to be accretive to EPS and ROE after the first year. The transaction is expected to be completed towards end 2016.
“Based of price/AUM of 1.75%, the acquisition will contribute about 1.1% to OCBC’s 2017 net profits,” says Maybank.
As 9.13am, OCBC shares are down 0.85 at $8.74.
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In a Thursday note, Maybank says while the acquisition provides an opportunity for OCBC to broaden and complement its wealth management franchise in Singapore and Greater China, it believes topline growth will slow and non-performing loans could rise from the oil & gas support services segment.
OCBC announced that its private banking arm, Bank of Singapore, will acquire Barclays’ wealth and investment management business in Singapore and Hong Kong for an indicative purchase price of US$320 million ($434 million).
With an AUM of US$18.3 billion as of Dec 2015, this translates to price/AUM of 1.72% in line with what DBS paid for Societe Generale’s Asian Private Bank business in 2014. Total AUM will increase by a third from US$55 billion to US$73.3 billion.
This will move it up into one of the top 10 Asia private wealth banks - slightly behind DBS (AUM: US$75 billion).
OCBC expects the acquisition to be accretive to EPS and ROE after the first year. The transaction is expected to be completed towards end 2016.
“Based of price/AUM of 1.75%, the acquisition will contribute about 1.1% to OCBC’s 2017 net profits,” says Maybank.
As 9.13am, OCBC shares are down 0.85 at $8.74.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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