A Goldman Sachs May 10 report on local banks sounds decidedly bearish. “Our assessment shows Singapore banks’ shares are pricing in an 18% probability of a recession when we compare our base case and recession scenario-implied valuation relative to where the stocks are trading [now] versus their year-to-date peak,” says Goldman.
“In our recession scenario, we stress-tested 2023 earnings by factoring in Fed rates returning to zero, slower loan growth, higher credit cost and pressure on net interest income which gives us an average –44% EPS downside risk versus our base case,” it adds.
Goldman and other foreign research outfits were bullish on DBS Group Holdings. Some of them still are although group CEO Piyush Gupta did not sound as bullish about the outlook on April 29 compared to Feb 14. He remained largely sanguine on the bank’s outlook and its own pipeline of loans. He also reiterated that a rise of 100bps could increase DBS’s net interest income by as much as $2 billion annually.