To The Moon

🟠 OCBC Slides 5 Days Ahead of Earnings — Overreaction or Justified?

OCBC ($ocbc bank(O39.SI)$  ) has dropped for five straight sessions heading into its Q2 earnings.

The worry: Singapore banks are bracing for Net Interest Margin compression, with slowing loan growth and rising deposit costs.

But could the market be pricing in too much pessimism too soon? Is this dip fertile ground for a post-earnings bounce? ⚖️

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📉 Market Pricing in a NIM Squeeze — But Is OCBC Different?

At the heart of investor concern: banks like OCBC, DBS (D05.SI), and UOB (U11.SI) are expected to see NIMs peaking in late 2023 and trending lower.

MAS data shows corporate and consumer loan growth decelerating

Cost of funds rising faster than lending rate increases, tightening spreads

Analysts forecast NIM down 10–15 bps sequentially across the sector

But OCBC has some differentiation:

Greater ASEAN footprint, with businesses in Indonesia and Malaysia less rate-sensitive

Fee income from insurance and wealth management that could offset NIM pressure

Historical evidence: OCBC has held up better than peers during past compression cycles

So: are these NIM fears baked in—or could OCBC carve a different narrative?

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📊 Earnings Offsets: Not Just About the NIM

Let’s zoom out and see what might counterbalance margin pressure for OCBC:

Fee income recovery: Insurance, funds under management, and brokered loans continue to rebound post-pandemic slump

Loan mix resilience: A diversified corporate loan book across ASEAN helps cushion sector-specific stress

Cost discipline: OCBC has maintained a ~40% cost-to-income ratio through prior cycles — potential upside if headcount and expenses stay flat

Lower provisioning: Loan loss reserves may decline if seasoning improves in corporate book

Plus, the bank recently highlighted growth in digital banking users and cross-sell insurance penetration — both high-margin lines that help earnings resilience.

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💡 Fade the Fear, or Follow the Trend?

Here’s my positioning ahead of the results:

I’m selectively adding on weakness around S$16.80, which served as support back in May

I’m eyeing S$17.50–$17.70 as likely resistance if earnings spark a rebound

If OCBC confirms the full-year NIM assumption (e.g. only -10 bps), I see potential for a 2–3% bounce from current levels

My scenario:

Bullish: OCBC meets consensus on margins but delivers upside in fees and reserves → stock reclaims S$17.50

Neutral: NIM compression as expected + fees flat → stock trades sideways in S$16.80–17.50 range

Bearish: Earnings guidance implies structural margin deterioration or asset-quality risks → support breaks → potential move toward S$16.20

I personally lean toward a small position ahead of results, given past resilience and fee-offset potential.

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💬 What’s Your Call for OCBC This Friday?

With earnings approaching, how are you thinking about OCBC — and Singapore banks more broadly?

📊 Do you expect OCBC to beat, meet, or miss earnings expectations amidst margin pressure?

🤔 Will O39 bounce on fee recovery — or is the slide setting up a deeper correction into S$16–16.50?

▶️ And where do you think OCBC will close by end of day Friday post-earnings?

Let me know your price prediction and thesis below — both bulls and bears are welcome.

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> Disclaimer: This is not financial advice. For informational and educational purposes only.

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