Post-Publication Update — 30 August 2026
This article was written in May 2026 at a share price of S$22.92. OCBC reported its 1H2026 results on 7 August 2026. The analysis below reflects the original thesis as written; this note summarises what has changed.
What happened: OCBC’s 1H2026 results came in materially ahead of the base case assumptions in this article. Annualised ROE reached 13.7% for the first half and 14.4% in Q2 alone — above both the base case (12.5%) and bull case (14%) used in the P/B framework below. Wealth management fees grew 41% year-on-year, non-interest income reached 43.9% of total income, and the interim ordinary dividend was raised 15% to 47 cents, implying a full-year ordinary DPS of around 94 cents versus the conservative 83-cent assumption used in the DDM.
The market re-rating: The stock rose from S$22.92 to approximately S$31.09 following results, with multiple analyst target upgrades to the S$33–37 range. Including the 47-cent interim dividend received on 18 August, total return since publication is approximately 37–38%.
What this did to the Reverse P/B finding: The article’s central analytical finding — that at S$22.92 the market was implying a long-run ROE of 9.95%, well below OCBC’s historical delivery — has largely resolved. At S$31.09, the market-implied long-run ROE (using the same Ke of 6.85% and terminal g of 2.5%) is approximately 12.4%, broadly in line with historical ROE and the P/B base case fair value of S$31.56. The gap the article identified has closed.
One major new input: Management disclosed in the 1H2026 results presentation that their target operating range for fully phased-in CET1 is 14%. Current fully phased-in CET1 stands at 14.0%. OCBC is now at its capital target, which means the S$2.5 billion capital return plan represents the completion of a one-time normalisation, not an ongoing programme. Post-plan capital allocation — whether ordinary dividend growth, further buybacks, or acquisitions — remains an open question.
Where things stand now: At S$31.09 the stock is approximately at P/B base case fair value. NIM continues to compress (1.73% in 1H26, 1.70% in Q2), and this remains the single most important variable to watch. The bull case requires NIM to bottom and WM fees to compound — Q2’s 14.4% ROE is early evidence this combination is achievable. The DDM-to-P/B divergence discussed below remains intact; at current prices, the stock is trading on earnings power (P/B logic), not dividend yield (DDM logic).
Disclosure: At time of writing, the author holds a long position in OCBC Group (SGX: O39), comprising approximately 1100 shares.
Disclaimer: This article reflects the author’s personal analysis and opinions, written in a strictly personal capacity. It is not financial advice and does not take into account any individual reader’s financial situation, investment objectives, or risk tolerance. Information is sourced from publicly available filings as of the date noted but accuracy cannot be guaranteed. The author may hold positions in securities discussed (see disclosure above). Readers should conduct their own research and consider consulting a licensed financial adviser before making any investment decisions. The author is not a licensed financial adviser under the Financial Advisers Act of Singapore.
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