SINGAPORE (Nov 26): Singapore's three listed banks should see non-performing loans peak and loan growth improve only modestly next year, but the big earnings booster will come from higher interest rates, Nomura predicts.

The research house says it believes that Singapore's interest rates "will continue their upward trajectory" despite the progress they have already made this year, "because of the currency depreciation and tight liquidity conditions."

If that happens, net interest margins at DBS Group Holdings, Oversea-Chinese Banking Corp. and United Overseas Bank could benefit, as Singapore dollar assets pre-price higher and faster than the banks' liabilities. Nomura says DBS stands to benefit the most.

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