Singapore Banking Monthly - Phillip Securities 2023-02-06: Interest Rates Growth Plateau

• January’s 3-month SORA was down by 3bps m-o-m to 3.05%, the first decline since August 2021.
• Singapore domestic loans dipped 0.30% y-o-y in December, below our estimates, while Hong Kong’s domestic loans declined 2.99% y-o-y in December. CASA balance dipped slightly to 20.4%.
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• UOB: S$1.59bn, and
• OCBC: S$2.03bn.

We expect bank NIMs to rise another 34bps in 4Q22. Valuations for OCBC are the most attractive and could offer largest upside surprise from dividends.

Maintain OVERWEIGHT. We remain positive on banks. Bank dividend yields are attractive at 5% with possible upside surprise due to excess capital ratios and push towards higher ROEs. SGX is another major beneficiary of higher interest rates.

3M-SORA and 3M-SIBOR growth flattens in January

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• The SORA m-o-m decrease was the first since August 2021 and came after 8 months of double-digit m-o-m growth, while the SIBOR m-o-m increase was 22bps lower than the previous month’s increase of 23bps.
• January’s 3-month SORA improved by 285bps y-o-y and was 37bps higher than the 4Q22 3-month SORA average of 2.68%.
• January’s 3-month SIBOR improved by 381bps y-o-y and was 29bps higher than 4Q22 3-month SIBOR average of 3.96%.

Singapore loans growth declined in December

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Glenn Thum Phillip Securities Research | https://www.stocksbnb.com/ 2023-02-06 SGinvestors.io

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