Overseas Chinese Banking Corporation (OCBC Bank)

[weijian]

The CFO, Miss Goh is right mathematically. Paying a dollar for <1dollar worth of assets on paper, will reduce your paper value.

In general, dividends are capital that is not retained and leaves the company - hence has an effect of "reducing the share price", if the company is been valued based on book value. OTOH, sharebuyback (SBB) retains the capital with the company and so has opposite effects.

Based on Miss Goh's logic, what DBS is doing in terms of SBB (after giving bonus shares) is not a clever move I suppose. So with both companies having excess capital, who's right? I will bet my money on the venerable banker at DBS.

OCBC has enough capital for M&A, business growth: CEO Helen Wong

On the other hand, OCBC prefers to use dividends to manage its capital, given its price-to-book ratio of just above 1, chief financial officer Goh Chin Yee said last week during an earnings briefing. OCBC reported its third-quarter profit rose 9 per cent to S$1.97 billion, roughly in line with analysts’ estimates of S$1.91 billion. Wealth income, which includes banking and insurance, rose 15 per cent from a year ago.

https://www.businesstimes.com.sg/compani...helen-wong

[setan]

The CFO, Miss Goh is right mathematically. Paying a dollar for <1dollar worth of assets on paper, will reduce your paper value.

In general, dividends are capital that is not retained and leaves the company - hence has an effect of "reducing the share price", if the company is been valued based on book value. OTOH, sharebuyback (SBB) retains the capital with the company and so has opposite effects.

Based on Miss Goh's logic, what DBS is doing in terms of SBB (after giving bonus shares) is not a clever move I suppose. So with both companies having excess capital, who's right? I will bet my money on the venerable banker at DBS.

OCBC has enough capital for M&A, business growth: CEO Helen Wong

On the other hand, OCBC prefers to use dividends to manage its capital, given its price-to-book ratio of just above 1, chief financial officer Goh Chin Yee said last week during an earnings briefing. OCBC reported its third-quarter profit rose 9 per cent to S$1.97 billion, roughly in line with analysts’ estimates of S$1.91 billion. Wealth income, which includes banking and insurance, rose 15 per cent from a year ago.

https://www.businesstimes.com.sg/compani...helen-wong

Hi Weijian,

After reading your post on dividend & share buyback, I personally think that both corporate actions the capital are not retain by the company. For dividend, it is distributing to all stakeholders and share buyback to the divesting stakeholders.

Both actions are reducing the total equity of the company which have similar effect. As to the effect on the share price to me can attribute to other factors like improving the future ROE, the future profitability of the individual company, ... etc.

Correct me, if I'm wrong.

setan

[weijian]

Hi setan,

A quick thought exercise below. And yes, going to be durians again.

A durian stall has 100shares with equity value=100sgd. So its NAV=1sgd. By the end of the season, the durian stall made 10sgd net profit, which means its equity value is now 100+10=110sgd (or NAV=110/100=1.1sgd), while it has EPS=10/100=0.1sgd. Now, the controlling shareholder wants to pay out all the profits, he can decide whether to pay out 10sgd in dividends or to buy out its existing shareholders, using the 10sgd for either activity fully.

He decides to buy out its existing shareholders and offer a price of 1sgd/share. It is fully taken up and the no. of shares reduces from 100 - 10 = 90shares. In the next season, the company similarly earned 10sgd as well. At this point of time, its NAV would be (110-10+10)/90= 1.2sgd. Its EPS would be 10/90= 0.11sgd. If the durian stall had paid out everything in dividend in the prior year, then it would still have the same NAV (110/100=1.1sgd) and EPS (10/100=0.1sgd) at the end of last year.

So this durian example may be clear that there is a big difference between dividends and SBB. In the SBB scenario, what caused the increase in NAV and EPS if capital wasn't retained for "something"? In essence, SBB is just another capital allocation decision and one is making a decision to do M&A on your own shares - by buying earnings of your own company.

[setan]

Hi setan,

A quick thought exercise below. And yes, going to be durians again.

A durian stall has 100shares with equity value=100sgd. So its NAV=1sgd. By the end of the season, the durian stall made 10sgd net profit, which means its equity value is now 100+10=110sgd (or NAV=110/100=1.1sgd), while it has EPS=10/100=0.1sgd. Now, the controlling shareholder wants to pay out all the profits, he can decide whether to pay out 10sgd in dividends or to buy out its existing shareholders, using the 10sgd for either activity fully.

He decides to buy out its existing shareholders and offer a price of 1sgd/share. It is fully taken up and the no. of shares reduces from 100 - 10 = 90shares. In the next season, the company similarly earned 10sgd as well. At this point of time, its NAV would be (110-10+10)/90= 1.2sgd. Its EPS would be 10/90= 0.11sgd. If the durian stall had paid out everything in dividend in the prior year, then it would still have the same NAV (110/100=1.1sgd) and EPS (10/100=0.1sgd) at the end of last year.

So this durian example may be clear that there is a big difference between dividends and SBB. In the SBB scenario, what caused the increase in NAV and EPS if capital wasn't retained for "something"? In essence, SBB is just another capital allocation decision and one is making a decision to do M&A on your own shares - by buying earnings of your own company.

Hi Weijian,

I got it, you are right. There is a difference. Thanks for explaining.

setan

[weijian]

OCBC
Ms Helen Wong, to take over from Mr Samuel Tsien as Group CEO on 14 Apr 2021.

Ms Helen Wong joined OCBC Bank in February 2020 as Deputy President and Head of Global Wholesale Banking. 

When I started investing many moons ago, one of the first things I learnt was that family-owned banks are more conservative and conservative banks are better investments. Therefore, family owned banks are better investments than non family owned ones. Later on, this "belief" was reinforced when the 2 family-owned banks  OCBC and UOB did not do a rights issue during GFC2008 and DBS did one instead. Now to the present, I realize my own fallacy in the logic (family owned banks are probably more conservative but they don't automatically become better investments)

Much has been revealed in this BT article. I suppose it now make sense why DBS/UOB has very specific numbers for share buybacks (and pretty aggressive) while OCBC doesn't.

OCBC’s billionaire owners seen posing challenge for new CEO Tan Teck Long

Risky moves by the bank could jeopardise that wealth. In recent years, several planned investments were derailed after the family baulked at ponying up, according to the sources. These include a S$2 billion renovation of the bank’s 50-year-old headquarters, and a sweetened bid to take its Great Eastern Holdings insurance business private. Despite pitches from bank executives, the potential returns in each case were not seen to justify the costs, said the sources. Key decisions still require the family’s blessing, according to more than a dozen sources with knowledge of the Lees and bank management.

At the same time, some family members without roles at the bank tend to weigh in on matters that affect their investments. Tensions have flared over the bank’s dividend policy, sources familiar said. The current yield of 3.8 per cent is well below DBS’s 4.8 per cent. Today, numerous family members benefit from the OCBC stake, though none of them are deeply involved in the bank, according to sources close to the family.

As he settles into his new role, Tan will need family support for major strategic moves, along with buy-in from non-executive chairman Andrew Lee. Though not part of the clan, Lee, 73, is a trusted lieutenant of the family who assumed his role in 2023. Helen Wong, the CEO for the past four years, had a difficult relationship with Lee, according to sources familiar with the matter who asked not to be identified due to the sensitivities of the matter.

The bids have faced resistance from Great Eastern shareholders, including some distant Lee family relatives, who have pushed for higher offers. Two decades of takeover attempts have led to resentment, turning annual meetings increasingly acrimonious. In January 2025, Wong was tasked by Andrew Lee to meet with key Great Eastern shareholders who rejected a S$1.4 billion bid for a 12 per cent stake the previous year, sources familiar had said. The chairman also tried to meet with some holdouts, according to the sources. A fresh bid was scuttled for a fourth time in July after the bank’s improved offer came in at least S$230 million short of minority holders’ demands. OCBC, which was advised by JPMorgan Chase, said it did not plan to make another offer in the foreseeable future. That same week, OCBC announced that Wong, 64, would step down as at Dec 31. Wong said she had planned to leave for family reasons. A bank spokesperson said her retirement was not related to Great Eastern.

https://www.businesstimes.com.sg/compani...-teck-long

[EnSabahNur]

In January 2025, Wong was tasked by Andrew Lee to meet with key Great Eastern shareholders who rejected a S$1.4 billion bid for a 12 per cent stake the previous year, sources familiar had said. The chairman also tried to meet with some holdouts, according to the sources.

This is a very sub-optimal situation.

[swakoo]

[weijian]

hi swakoo,

Below is an extract from a recent analyst report on the STI that I reproduce (in italics below):

Year-to-date, the four financials in the STI are up 42%. The rest of the 26 STI constituents performance are collectively flat. The mid-cap Next50 Index is 12% higher, widely underperforming large-cap financials. While Singapore is amongst the best performing markets regionally and globally (10% outperformance against S&P500), the drivers are narrow.

------------------

I suppose the bottom pic may depict what has happened to the top3 STI constituents in 2026YTD minus the last 2 trading days, while the top pic is for what has happened in the last 2 days?

Jokes aside. To be entirely honest, some of the stock price movements have been baffling to me - whether are they going up or down - but I am not complaining though.

[swakoo]

Below is an extract from a recent analyst report on the STI that I reproduce (in italics below):

Year-to-date, the four financials in the STI are up 42%. The rest of the 26 STI constituents performance are collectively flat. The mid-cap Next50 Index is 12% higher, widely underperforming large-cap financials. While Singapore is amongst the best performing markets regionally and globally (10% outperformance against S&P500), the drivers are narrow.

------------------

I suppose the bottom pic may depict what has happened to the top3 STI constituents in 2026YTD minus the last 2 trading days, while the top pic is for what has happened in the last 2 days?

Very astute observation.
(And the drivers of S&P500 itself are also narrow.)

Jokes aside. To be entirely honest, some of the stock price movements have been baffling to me - whether are they going up or down - but I am not complaining though.

Yes, I am just as baffled. It seems like maybe the instantaneous speed of algorithmic AI trading has significantly increased the usual volatility driven by headlines that are reinforced by herd instinct emotions.

[weijian]

hi swakoo,
Besides STI and S&P500, ain't the drivers of TWSE and KOSPI also narrow (or even more narrow)? It seems like the better performing markets are always narrow, isn't it? Conventional wisdom used to say that market breadth breaks down at the end of the bull, as participants get nervous and increase their exposure to the larger caps. Along the way, I realize the lack of market breadth is a feature of markets and not a bug. Capitalism follows the power law distribution, where the gap between the top 90% vs 95%, is much bigger than the gap between 50% and 55%.

As to the factors toggling the 3 banks' movement, I will try to use 3 high level stats as below (as of early/mid Sept2026):

Net institutional Inflow (NIF): -1.6bil sgd, Essentially institutions have been net sellers with DBS having ~1.8bil sgd outflows but OCBC/UOB having ~200mil inflows.
Net Retail Inflow (NRF): 2.9bil sgd, DBS and OCBC contribute ~80% and ~20% respectively while UOB is negligible.
Share buyback (SBB): ~443mil sgd, almost equally shared between UOB/OCBC with DBS (wisely) not doing any SBB.

DBS: Institutions have been net sellers but retailers more than took up the slack. DBS's own SBB is inactive in 2026YTD.
OCBC: Retail and SBB have been the large demand for its stock, with institutional demand ~10x lower.
UOB: Institutions and SBB have been the large demand for its stock, with tepid retail demand.

Algo trading has been blamed for sudden short-lived violent stock movements in the US markets but I wonder if such algo trading is present (and significant) in the Spore market, even for its large caps? We don't have a big option trading market here and so for one, we can rule out those market makers having to do their regular algorithmic hedging against their own option exposure.

2026YTD NIF/NFR data (as of 17th Sept 2026): https://www.sgx.com/research-education/m...t-sessions
2026YTD SBB data (as of 2nd Sept 2026): https://www.sgx.com/research-education/m...s2-billion