At the start of this month, Citi cut its rating on Oversea-Chinese Banking Corporation, or OCBC, from Neutral to Sell, setting a target price of S$27.50.

Investors reacted by rushing to sell.

OCBC shares plunged 5.9% in a single trading day.

DBS Group and United Overseas Bank, or UOB, fell in tandem.

The signal was clear: dump OCBC.

But here is what most investors overlooked.

Take Citi's target price and divide it by OCBC's book value (as at 30 June 2026) of S$13.73 per share, and the result is a striking ratio: two times book.

Let me give that some context.

Over the past ten years, OCBC shares have traded at an average of 1.22 times book value.

From 2017 to 2025, the ratio stayed below 1.5 times for most of that period.

Put another way, Citi's bearish target still prices OCBC at more than 60% above its long-term average multiple.

Not long ago, a target like that would have seemed wildly optimistic.

So if even the Sell call looks expensive by historical standards, what does that say about Singapore's banks today?

The answer is: bank shares are indeed cheaper.

But they are still not cheap.

A lower share price does not make a bargain.

When shares trade at higher multiples, the banks have more to live up to.

And that has not changed.

Cheaper, but not cheap

Let's begin with the numbers.

OCBC, even after its recent slump, sits at about 2.1 times book.

That is over 70% above its long-term average.

For most of the past decade, OCBC traded close to its average, marked by the dashed red line.

That shifted from late 2024 onwards, when the shares broke well clear of their historical range.

Notice the deep dip in 2020 as well.

The dividend yield points the same way.

At S$29, OCBC yields 3.6%, below its 10-year average of 4.5%.

But that figure includes a special dividend.

Count only the ordinary dividend, and the yield falls to 3.1%.

Even at Citi's S$27.50 target, OCBC would yield 3.8%, still below its long-term average.

The price of a bargain

For a bank to trade at a truly cheap valuation, there is a trade-off you have to accept.

Something bad usually has to happen first.

If you are a deep value investor, you would wait for OCBC to trade at or below its book value of S$13.73.

But you will not know when that will be.

It has happened only around three times in the past 20 years.

The sharpest dip of the past decade came during the COVID-19 pandemic in 2020.

That is the dip you saw in the chart earlier.