Why OCBC's 2Q13 is a sneak-peek to the impact of interest rate hikes

Headline accounting earnings to be hurt.

According to CIMB, they see OCBC’s 2Q13 miss as a prelude to what can happen to its profitability when interest rates start to rise.

Sure, higher interest rates will eventually make its leading insurance franchise more valuable – NBEV of insurance policies written in a high-interest rate environment tends to be higher but that is for the future.

Here's more from CIMB:

As interest rates rise, expect headline accounting earnings to be impacted. Worst for OCBC is if its current below-industry NPL ratio starts to head up and have credit costs add to further earnings headwinds.

We retain our Underperform recommendation, with a recently lowered GGM-based target price of S$10.09, based on 1.27x CY13 P/BV.

Catalysts for underperformance include future quarters when markets get volatile and rising provisions.

If you've been wondering whether SBR could work for your company — yes, probably.

A lot of the companies we partner with started as readers. They'd been following our coverage for a while, saw their own customers and competitors in it, and eventually asked the obvious question: could we do something with you? The answer is usually yes. The shape of it depends on what you're trying to do.

The options are broader than most people assume — thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. Some partners use one channel; most use a mix. We figure out the right combination by starting with your brief, not with our rate card.

So if the question has been on your mind, here's the easy way to ask it.

We'll tell you honestly whether we can help, and how. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia