SINGAPORE (Dec 23): RHB Group Research is maintaining the three local banks -- DBS Group Holdings, UOB and Oversea-Chinese Banking Corp -- at “neutral” after their combined net profit is expected to come in flat y-o-y while net interest income (NII) growth is expected to be flattish too, given guidance from the banks of net interest margin (NIM) pressure and soft loan growth.

In a Dec 19 report, analyst Leng Seng Choon expects 2020 loan growth to average 3.5% y-o-y for the three banks and estimates NIM to narrow by 4-7bps – factoring in a falling Sibor and competitive home mortgage rates, which "will cut lending yields for the banks", says Leng.

In 3QFY2019 ended Sept, loan growth for the three local banks averaged 5% y-o-y as business loans growth offset home mortgage weakness.

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