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Broker's take: OCBC's purchase of NAB's private wealth business positive
OCBC Bank's acquisition of National Australia Bank's (NAB) private wealth business in Singapore and Hong Kong could be positive for the Singapore bank's overall wealth management business, RHB Research Institute said.
Its Singapore banking analyst, Leng Seng Choon, said on Thursday that the acquisition could help OCBC expand its share of loans to the housing mortgage space, which typically has lower risks than corporate loan market.
He believes, however, the impact of the acquisition is likely to be small as the acquired loans and deposits only account for 1.1 per cent and 1.6 per cent of OCBC's current loans and deposits, respectively. RHB is keeping a S$10.22 a share target price for OCBC and his neutral recommendation for now.
Earlier on Thursday, OCBC said it has agreed to buy NAB's private wealth business in Singapore and Hong Kong. As at end February 2017, NAB's business comprised a mortgage portfolio amounting to about US$1.7 billion (S$2.39 billion) worth of mainly residential mortgage loans, and a deposit portfolio made up of about US$3.05 billion (S$4.28 billion) worth of deposits of a mix of currencies.
OCBC said the addition of US$1.7 billion of mortgage loans will increase the overall size of its mortgage portfolio by about 4 per cent, based on its mortgage loans book of S$60 billion as at end March 2017.
At 04:32pm, OCBC was trading around S$10.56, a share, up 10 Singapore cents, or 0.96 per cent.