User Research/Opinions   

OCBC Bk 4.2% NCPS

Hi experts, just want to check after reading all the threads on NCPS...

The 4.2% dividend is of the issue price, or the par value? I read on the SGX website the par value for this NCPS is $0.01, and finance websites have explained NCPS to pay % of par value.... So which is right? (4.2% of $0.01 is very little!!)

Thanks

 

  I do not know when the bank will redeem its preference shares. If they so decide to redeem, they will make announcement. Redemption means the bank will pay 100% of the capital ($1 per share in this case) plus whatever interest accrued up to that point in time.  

 

Thanks allantanhc

Any idea why/when would the bank decide to redeem them? If so, what happens to the shareholders' investment?

Tks/Rgds

 

Hi, hokokfei, 

NCPS stands for non-convertible preference shares. It pays a dividend half-yearly at interest rate of 4.2% pa i.e. you get 2.1% return every 6 months. In the case of OCBC, the 4.2% is post tax. In the case of DBS, I understand it is before tax. I am not sure that if the banks have given guarantee for its dividend payment. As long as the banks make a profit, you are quite sure to get your dividends. However, if the bank loses money and goes bankrupt in an economic recession, you may even lose your capital. 



Buying/selling is like ordinary stocks but I think there is a minimum lot size of 10000. Preference shares works like bonds but carry with it a higher risk. Bonds are considered as loans but preference shares are equities. Because of the high risk, NCPS enjoys a higher dividend rate compared with bonds interest rate. I am not aware that there is an expiry date for OCBC preference shares but I suppose the bank can always decide to redeem them.



Prices of NCPS do not vary much. It moves up closer to dividend payout date but goes down at XD. Interest rates do affect the share price just like bond prices are affected by interest rate.  



It is basically a low risk, fixed income instrument for the more conservative investors looking for returns better than FD in banks.



That's so much I know. 

 

Hi all

Can anyone enlighten me how does the subject work?

There is also a similar counter with a "100" at the back.

There is also a DBS 6% NCPS.

All I heard is they are guaranteed to give the mentioned percentage of interest annually. If true, what is the catch? Minimal purchase of amount/share qty required? Can sell earlier & what happens then? Any expiry date? Trading volume is understandable to be minimal but why is there minimal price changes & how will we be affected?

Tried to check various sources like SGX website, etc. No luck. Our SGX website is really bad for one aspiring to be of intl repute. I am stationed outside Spore so that is why I cant approach the respective banks personally. My friend tried to do so on my behalf but the bank staff are blurred & I think they see no up my friend. Must be very high $$$ purchase lah.

Thanks.