OCBC share price at threshold of an era
Being the oldest bank in Singapore, OCBC was born out of the Great Depression through the consolidation of three banks in 1932 – the Chinese Commercial Bank Limited, the Ho Hong Bank Limited and the Oversea-Chinese Bank Limited. Through the decades, OCBC had weathered numerous storms and went on to become one of the largest banks in Southeast Asia. In May 2018, OCBC share price even hit a sensational high of $14. The powerful surge of OCBC share price created much wealth for wealth builders.
Will OCBC share price recapture its magical form again? A lot will depend on the management long-term strategies. Indeed, OCBC has a rich heritage as its founding father is Lee Kong Chian, the son-in-law of Mr Tan Kah Kee. Former Singapore President, Dr Tony Tan, also used to be OCBC Chairman and CEO in the early nineties. The uncle of Tony Tan was the late Tan Chin Tuan, the man responsible for the numerous investments of OCBC such as Fraser & Neave, Raffles Hotel, Robinson, Straits Trading, Wearnes and Great Eastern Life.
Under Lee Kong Chian’s leadership, OCBC embarked on overseas expansion since 1950s, opening branches in China and Malaysia. The early days’ overseas adventure helped OCBC to become one of the largest listed banks in Southeast Asia by market capitalisation. The strong business foundation and overseas businesses also enabled OCBC to ride out the 1997’s Asian Financial Crisis and 2008’s Great Financial Crisis. As a result, OCBC share price had been rising steadily through the decades.
Thus, investors of OCBC should be confident of the long-term prospects of OCBC share price and not lose sleep over the short-term volatility of OCBC share price. After all, this is an institution that has withstood the test of time.
OCBC share price in soft landing mode
Since reaching the epic high of $14, OCBC share price fell off the cliff to reach the current $11.60 level. The decline of OCBC share price started with the release of 1QFY2018 results, which saw a flat growth of Net Interest Margin (NIM) of 1.67% on a quarter-to-quarter basis. There were market concerns as NIM is a key growth metric for banks and against the backdrop of rising interest rates, a stagnant NIM could indicate slowing growth momentum for OCBC.
Subsequently, OCBC share price continued to spiral out of control. In July 2008, the announcement of new property cooling measures probably added more salt to injury. Since then, OCBC share price lost steam and continue to be an enigma. The burning question for most investors must be whether OCBC share price would regain its mojo again.
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