- September’s 3-month SORA was down 7bps m-o-m to 3.53%, the lowest since March 2023, and 6bps lower than the 3Q24 average. We expect the 3-month SORA to decline in tandem with the Fed Rate cuts. 3-month HIBOR was down 24bps m-o-m in September to 4.07%, a continuation from the decline of 38bps in August.
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- Downgrade banks to NEUTRAL from Overweight. NIMs will dip slightly, going into 2H24 and FY25, from the expected rate cuts, but we expect NII to remain stable from the movement of deposits into longer tenures and higher interest-yielding assets. A recovery in loan growth and continued double-digit fee income growth will offset the NII stagnation.
- Our preferred bank is UOB due to its higher proportion of fixed deposits which could benefit cost of funds, lower exposure to Hong Kong commercial property and push towards the ASEAN region/non-interest income.
3-month SORA and 3-month HIBOR fall
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- Hong Kong interest rates fell in September. The 3-month HIBOR was down 24bps m-o-m to 4.07%, a continuation from the decline of 38bps in August. Furthermore, August’s 3-month HIBOR dipped by 88bps y-o-y and was still 29bps lower than the 3Q24 3-month HIBOR average of 4.36%. This is the lowest the 3-month HIBOR has been since April 2023.
Singapore loan growth at low-single digit
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