Banks have had a better 3QFY2020 compared to their 2QFY2020. The biggest surprise was Oversea-Chinese Banking Corp’s (OCBC) net profit which rose 41% q-o-q to $1.03 billion. This came on the back of a tailwind from non-interest income, including that from Great Eastern Holdings, and lower general provisions compared to 2Q2020.

United Overseas Bank’s (UOB) net profit of $668 million was a slither above the Street’s estimates of $641 million. DBS Group Holdings net profit of $1.3 billion was marginally below a Bloomberg average estimate of $1.4 billion, but above the expectations of some analysts.

The “cliff scenario”, which is related to forbearance and moratorium loans, particularly in Malaysia and the region as well, has not materialised and both OCBC and UOB are exiting these moratoriums smoothly. The two banks gave similar guidance on loans under moratorium as both banks have sizeable operations in Malaysia and Singapore. In Singapore, loans under moratorium were granted under an opt-in option while in Malaysia, everyone could have their loans under moratorium till end-Sept with an opt-out option.

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