UOB lowers target for OCBC to $11.80, keeps buy

Stock Name: OCBC Bk
Company Name: OVERSEA-CHINESE BANKING CORP
Research House: UOB KayHian

UOB Kay Hian has lowered its target price for Singapore lender Overseas-Chinese Banking Corp (OCBC.SI) to $11.80 from $11.96 but kept its buy rating.

OCBC missed market forecasts for its quarterly profit as higher costs offset strong loan income and falling bad debts. The bank posted net profit of $505 million in October-December, compared to $502 million in the same period a year earlier.

UOB Kay Hian said OCBC’s fourth quarter results were lacklustre compared with the third quarter when it reported strong interest and non-interest income, as well as net profit of $570 million.  

The brokerage said that while it maintained its buy rating, it expects short-term weakness for OCBC’s share price due to the lower-than-expected fourth quarter results.

UOB Kay Hian added that it has cut its net profit forecast for 2011 by 2.4% to $2.4 billion due to higher staff costs and operating expenses.  

At 9:28 a.m., OCBC shares were down 0.7% at $9.34 on a volume of 1.3 million shares.