Updates

OCBC open to foreign banks’ local operations

Oversea-Chinese Banking Corporation ($4.89), Singapore’s best capitalized bank reported a 16% decline in net profit to $1,749 million for the financial year ended December 31 2008 (FY08). Excluding divestment gains from Straits Trading and Robinsons & Co and tax refunds, net profit would have fallen by 21% to $1,486 million.

The bank blamed the decline in profitability on the severe market conditions and depressed economic environment during the year, especially in the second half. The contribution from insurance subsidiary Great Eastern Holdings to the OCBC’s net profit fell from $449 million to $160 million the bank said.

CEO David Conner assured media during a results briefing that the bank had no plans for a rights issue. Instead, the bank is offering shareholders scrip dividend in lieu of the 14 cents payout for its final dividend should they wish to opt for the scrip dividend scheme. The bank’s interim dividend for 1H08 was 14 cents.
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OCBC would also be interested in the local operations of foreign banks if they fitted in with the bank’s own New Horizon’s II strategy. Great Eastern for instance took a look at the Taiwanese and Philippine operations of AIG but decided they didn’t fit into the local insurer’s business strategy.
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Elsewhere, the credit crunch continues to bite. STATS ChipPAC has called off its US$813 million capital reduction / distribution plan, as it failed to secure financing in the past 13 months for what was supposed to be an American-style LBO. Temasek spent $1.6 billion (paying $1.75 per Stats share) to raise its stake to 83% from 36% during the takeover in early 2007. Their share from the distribution would have been about $1 billion local broker Lim & Tan calculates. “With the stock at 40 cents, this has turned out to be another bad investment” the report states.
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Chart Watch: SGX
The Singapore Exchange ($4.90) could be breaking down following its inability to hold on to the $5.00 support level. If so, selling could materialize. Support is at the opening low of $4.35 attained on Nov 21 last year. Short- and medium-term indicators continue to display positive divergences with price. This is an indication that current moves are part of a much broader base formation. It also suggests that the $4.35 support mark should hold.

Source :THE EDGE!

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