SINGAPORE (Nov 23): DBS says investors should watch for three important developments in the banking sector next year which are NIM (net interest margin) acceleration, cleaner asset quality position with lower credit costs and sustained loan growth recovery.
In a Wednesday report, analyst Lim Sue Lin says Singapore banks have had a fantastic rally this year, collectively appreciating by more than 30%, even though higher NIM was not visible until 2H17 and hopes of NPL (non-performing loans) easing in the oil & gas sector failed to materialise.
Next year though, the SIBOR rally should kick in, leading to NIM acceleration. Meanwhile, upsets in the oil & gas sector were dealt with in 3Q17, which should ease credit costs. Finally, loan growth has picked up and should sustain on a positive GDP outlook forecast at 3%.