Home Capital Banking & finance

Banks the best proxy play for rising interest rates, say analysts

Goola Warden
Goola Warden1/13/2022 6:53 PM GMT+08  • 8 min read
Banks the best proxy play for rising interest  rates, say analysts
Banks are the best investment proxies for the Fed's increasingly hawkish stance on interest rates, analysts say
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

DBS Group Holdings hit a new all-time high of $35.42 on Jan 11. Year to date, the local banking behemoth is up 8%. Oversea-Chinese Banking Corp (OCBC) has rallied 6.2% since the start of the year but at $12.11, it is not at an all-time high. Back in 2018, OCBC had traded above $13.73. United Overseas Bank (UOB) is up 8.9% since the start of the year. UOB has been ahead on various digital aspects such as launching its digital bank UOB TMRW across Asean. It has also not written back any of its expected credit loss (ECL) 1 and 2 provisions, leaving multiple avenues to boost earnings.

Three key trends are likely to affect the way banks perform. In a note at the end of 2021, RHB Research summed them up as cyclical recovery, rising interest rates and fee income growth. If the pandemic transitions to an endemic phase, we should expect a cyclical recovery, RHB argues.

The banks themselves are positive about the opening of borders and business momentum picking up. All three banks communicated that loan growth is likely to moderate from the high single-digit loan growth experienced last year.

For more insights on corporate trends...
Sign In or Create an account to access our premium content.
Subscription Entitlements:
Less than $9 per month
Unlimited access to latest and premium articles
3 Simultaneous logins across all devices
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)
×
Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.