OCBC's loans may grow by at least 7% in 2018

Every 1-ppt increase in loan growth can mean 0.9% jumps in net profit.

OCBC's recent strong loan growth of 5.5% was driven by housing loans, trade finance, overseas loan demand and Hong Kong-based companies, DBS Equity Research said.

Analyst Sue Lin Lim said, "The first three quarters of 2016 were extremely volatile and the bank took a cautious stance."

Loan demand started to pick up in 4Q16, tracked well up to 3Q17 and is expected to spill over into 2017.

Meanwhile, the bank is guiding for loan growth of 7-8% for 2017 to 2018. Loan demand appears apparent for Singapore companies investing abroad.

Moreover, every 1-ppt rise in loan growth leads to 0.9% increase in net profit.

DBS Equity Research projects the bank's loan growth to hit 8% for 2017 to 2019.

Photo by Terence Ong - Own work, CC BY 2.5.

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