- We believe the Singapore banking sector’s risk-reward is now largely balanced and see limited upside catalysts. We downgrade our outlook to NEUTRAL and lower UOB (SGX:U11) and OCBC (SGX:O39) to HOLD.
Operations resilient, but non-performing loan risks mounting
- - Read this at SGinvestors.io -
- On the flip side, asset quality risks are set to rise as central banks continue to fight inflation and growth slows.
- Top pick is DBS (SGX:D05) given strong franchise, ROE and North Asia growth. Regionally, prefer Malaysia’s CIMB, RHB.
Asset quality risks need closer watch
- - Read this at SGinvestors.io -
- Indeed, during the GFC (Global Financial Crisis) it took just 3-quarters for NPLs to rise from 1.5% to 2.5% and specific provisions jumped nearly 2x between 1Q08-4Q09. Similarly, during the O&M (offshore & marine) crisis, specific provisions increased nearly 3x between 1Q16- 4Q17.
- While China re-opening is a positive, how much of an offset this could provide is so far unclear. We estimates credit charges could rise to 24-26bps in 2023-24E compared to just 15bps in 2022.
NIMs higher for longer, but growth tapering
- Read more at SGinvestors.io.
Above is the excerpt from report by Maybank Research.
Clients of Maybank Securities may be the first to access the full report in PDF @ https://maybanktrade.com.sg/.
Thilan Wickramasinghe Maybank Research | https://www.maybank-ke.com.sg/ 2023-03-10
More reports on banking & finance sector:
Analyst Reports on Singapore Banking & Finance Sector
Read also:
Analyst Reports on DBS Group
Analyst Reports on OCBC Bank
Analyst Reports on United Overseas Bank (UOB)
