OCBC’s first-quarter earnings were up 14% year on year, backed by strong fee income growth and loan expansion.

Earnings per share (EPS) came in at 24 cents in the first quarter, beating Bloomberg’s consensus of 20.5 cents. The positive surprise sent OCBC’s share price up to $10.40 this morning, its highest level since July 2015. 

On the heels of similarly encouraging reports from DBS and UOB, Singapore’s lenders have each submitted better-than-expected results in the first quarter. Strong fees income rose mainly as a result of the ‘Trump effect’, which not only exerted positive influence on risk assets, but also led to a surge in trading activity. All three banks have displayed robust capital positions and sufficient provision for sour loans, the formation of which have shown signs of moderation as the oil price recovered from its recent low.

The next question is how much of the optimism has been priced in to the recent rally which we’ve seen since the end of April. And will ‘sell in May’ happen this year if this bullish sentiment runs out any time soon? Technically, OCBC’s share price has entered into a high-pressure zone between the 138%-161.8% Fibonacci extension levels. The Relative Strength Index (RSI) has surged further into the deep, overbought territory of the 89% area, warning of the risk of a technical pullback in the days to come.  

Separately, big profit taking in EUR pairs was observed last night following Macron’s victory in the French presidential election. EUR/USD tumbled nearly 100 pips since Monday’s opening, to the 1.092 area, wiping out the previous week’s gains due to profit-taking activities. European equity markets closed broadly lower too. 

OCBC



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