Singapore Banks - Maybank Research 2024-01-30: What To Expect For 4Q23 Earnings?

• DBS is set to report 4Q23 earnings on 07 Feb, UOB on 22 Feb and OCBC on 28 Feb. See earnings calendar.

Losing steam, but more dividend potential. NEUTRAL

• - Read this at SGinvestors.io -
• Similarly, weak growth in North Asia, high financing costs, corporate repayments and a strong S$ is likely to keep loan growth negative.
• Wealth management is unlikely to see green shoots with fixed deposits keeping funds locked up.
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Faltering net-interest margins, weak loans

• Net interest income is likely to further lose steam in 4Q23. In 3Q23, Net interest incomes expanded +1.6% q-o-q, slower than +2.7% in 2Q23. Net interest margins were flat in 3Q23 as funding costs caught up. With further Fed rate increases absent since 3Q23, we expect q-o-q net interest margins to decline.
• In 3Q23, loans fell -1% y-o-y. System loans till Nov 23 have contracted -3% y-o-y. The Chinese economy continues to show weakness while onshore borrowing costs are significantly cheaper. This is likely to dampen external loan demand in North Asia. Additionally, higher borrowing costs are driving corporate clients to pay down loans. These factors are likely to result in a further fall in loans in 4Q23.

Non-interest income in doldrums

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Thilan Wickramasinghe Maybank Research | https://www.maybank-ke.com.sg/ 2024-01-30 SGinvestors.io

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