- We see a lack of catalysts ahead and maintain our view that banks’ share prices have peaked, despite historically high dividend yields of 6%-7% and the safe haven appeal of the Singapore Dollars.
- Maintain HOLD on OCBC and UOB. While FY25F dividends remain intact, the backdrop of slower global growth and trade war rhetoric does not supportive an overweight position in the banking sector.
1Q25 NIMs flat to declining; SORA weakness partially offset by deposit growth.
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- The impact of lower interest rates on flagship accounts at OCBC and UOB will not be felt until 2Q25, as both banks engage in active deposit cost management. Note that DBS’s exit NIM in Jan 2025 is 2.12% (4Q25: 2.15%).
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Potential downside risk to NIMs as previous rate cut assumptions may not hold, sensitivity to increase through 2H25.
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