Singapore Banks - RHB Invest 2023-07-10: Heightened Economic Uncertainty Weighs In 2H23

Singapore Banks - Heightened Economic Uncertainty Weighs In 2H23

Singapore Banks - RHB Investment Research | SGinvestors.ioDBS (SGX:D05) OVERSEA-CHINESE BANKING CORP (SGX:O39) UNITED OVERSEAS BANK LTD (SGX:U11)
  • We cut our Singapore banking sector weighting to NEUTRAL from Overweight. UOB (SGX:U11) is our only BUY, on a shift in preference towards a smaller exposure to Greater China.
  • The recent series of disappointing macroeconomic data has led to growing expectations of a material slowdown in global economic activity in the later part of 2023. As such, investors are looking past the still-strong earnings growth of 2023, and fretting over industry prospects in 2024. We believe this will keep the share prices of Singapore banks we cover (SG Banks) rangebound in the near term.

Economic uncertainties cloud industry prospects.

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  • Still, we believe business confidence and consumer sentiment have been impacted by the heightened growth uncertainties in global economies. This suggests that softness seen in credit demand and investment banking activities will likely extend into 2H23.

Loan growth sluggish.

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  • With Singapore’s growth engines – manufacturing and financial services sectors – expected to stay in the doldrums in 2H23, demand for credit will likely stay tepid. Housing loans are holding up, helped by drawdowns. The drop in new bookings following recent cooling measures would only impact banks’ mortgage books about a year later.

Offset from still-healthy NIMs.

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Singapore Research RHB Securities Research | 2023-07-10

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)


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