Shares of Oversea-Chinese Banking Corp (OCBC) are currently trading at just under S$9 per share, an improvement of 14.3% since our last share price update on Singapore’s main three banks in March 2020 .
Between February and March, the Singapore money lender saw its stocks crash roughly 30% in value, dropping to S$7.81 a share – a level not seen since April 2016.
OCBC’s share price has recovered slightly in the last one week, following the Singapore government’s S$59.9 billion coronavirus three-part fiscal budget most recently unveiled on 06 April. However, this is still some ways below the company’s 2020 peak of S$11.20 achieved on 17 January, just a week prior to the coronavirus outbreak.
The coronavirus pandemic continues to worsen in Singapore, with 622 new infections confirmed over the long Easter weekend. This takes the total number of Covid-19 cases in the country to 2,532.
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Apart from the government stimulus, Singapore banks received a further boost after the Monetary Authority of Singapore (MAS) announced on 07 April a series of fiscal measures aimed at helping financial institutions to focus on dealing with issues related to the Covid-19 pandemic and supporting their customers during this time.
As part of the measures, Singapore financial companies will be allowed to adjust their capital and liquidity requirements to help sustain lending activities; set more realistic accounting loan loss allowances by taking into account the government’s latest fiscal assistance and banks’ relief measures; as well as defer implementation of the final set of Basel III reforms, margin requirements for non-centrally cleared derivatives, and other new regulations and policies, to ease operational burdens.
Singapore’s central bank also said in the same announcement that it does not see a need to restrict banks’ dividend policies, though the release of capital buggers should not be used to finance share buybacks during this period. New guidelines to improve OCBC’s dividend visibility
Following these announcements, Maybank analysts have given the OCBC stock a ‘buy’ rating, with a 12-month price target of S$10.32 per share.
Maybank analyst Thilan Wickramasinghe named OCBC as his preferred […]