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Banks should do better with a rate hike but which would gain most?

Gwyneth Yeo
Gwyneth Yeo11/8/2016 03:08 PM GMT+08  • 2 min read
Banks should do better with a rate hike but which would gain most?
SINGAPORE (Nov 8): Singapore banks could see better days after the US Federal Reserve announces its rate hike later this year, according to RHB Research which is maintaining its “neutral” rating on the sector.
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SINGAPORE (Nov 8): Singapore banks could see better days after the US Federal Reserve announces its rate hike later this year, according to RHB Research which is maintaining its “neutral” rating on the sector.

As RHB analyst Leng Seng Choon explains it, local banks saw a narrowing of net interest margins in 3Q16 due to the low interest rate environment. A rate hike would logically lead to a “firmer Singapore Interbank Offered Rate and widening of local banks’ NIMs”.

According to the RHB, a 10 basis point increase in SIBOR would increase earnings by 1.7% for DBS Group, 0.8% for Oversea-Chinese Banking Corporation, and 1.2% for United Overseas Bank.

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