Singapore Banks - RHB Invest 2023-01-09: NIM Tailwinds The Key Driver Of FY23F ROE Growth

• Singapore banks (SG Banks) are off to a decent start – rising 2% in the first week of 2023, after gaining a decent 7% (STI: +4%) in 2022.
• Tailwinds from NIM expansion would keep ROE on an upward trajectory, underpinning positive share price re-rating. China’s faster-than-expected pivot on its zero-COVID policy could create some near-term risks, but remains a long-term positive for Singapore.
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RHB economists more sanguine on outlook.

• RHB economists expect the Singapore economy to moderate slightly to 3.0% in 2023, from 3.7% in 2022. We expect growth to decelerate in 1H23 before stabilising in 2H23.
• Our 2023 GDP growth is more bullish than consensus’ growth forecast of 1.8% and the Ministry of Trade and Industry’s (MTI) projected expansion of 0.5-2.5%. MTI expects the challenging global environment to weigh heavily on Singapore’s export-oriented sectors.

Loan demand has softened.

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• SG Banks’ loan growth has moderated to 6% (annualised) in 9M22 vs +9.6% in 2021.

Room for further NIM expansion in 1H23.

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Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2023-01-09 SGinvestors.io

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