- We expect the delayed net-interest margin (NIM) expansion from numerous US Fed rate hikes this year to finally come through more substantially for Singapore banks in 3Q22F earnings. (See Earnings release dates.)
- - Read this at SGinvestors.io -
- That said, 3Q22F loan growth will likely slow (we expect ~1% q-o-q in 3Q22F) given weaker sentiment amid recession risks.
- On non-interest income (non-II), we think that fee income could stay flattish, weighed down by soft wealth management volumes, while trading income may benefit from heightened activity given the volatile market conditions. Credit costs could normalise upwards at ~15- 23bp in 3Q22F (from ~4-21bp in 2Q22F), including management overlay top-ups.
- - Read this at SGinvestors.io -
- We expect the delayed net-interest margin (NIM) expansion from numerous US Fed rate hikes this year to finally come through more substantially for Singapore banks in 3Q22F earnings. (See Earnings release dates.)
- Although snaking queues to place fixed deposits (FDs) at multi-year high rates hint at continued outflow of CASA (into FDs and higher yielding instruments such as Singapore Savings Bonds, T-bills, etc.) as we saw in 2Q22, the simultaneous repricing of loan portfolios on higher benchmark rates (average quarterly 3M-SIBOR/ 3M-SORA/ 3M-LIBOR rose ~1.27%/ ~0.97%/ ~1.5% in 3Q22 respectively) should still provide a sizeable ~24-30bp q-o-q boost to NIMs in 3Q22F.
- That said, 3Q22F loan growth will likely slow (we expect ~1% q-o-q in 3Q22F) given weaker sentiment amid recession risks.
- On non-interest income (non-II), we think that fee income could stay flattish, weighed down by soft wealth management volumes, while trading income may benefit from heightened activity given the volatile market conditions. Credit costs could normalise upwards at ~15- 23bp in 3Q22F (from ~4-21bp in 2Q22F), including management overlay top-ups.
- We expect DBS (SGX:D05) to post 3Q22F net profit of ~S$2.05bn (+13% q-o-q, +21% y-o-y), driven mainly by a more substantial pass-through of rate hikes into NIMs. We forecast a ~30bp q-o-q expansion in NIM to ~1.88% in 3Q22F.
- Read more at SGinvestors.io.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
Andrea CHOONG CGS-CIMB Research | LIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2022-10-17
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