The outlook for banks is closely tied to the outlook for the economy. DBS Group Holdings ticks a few boxes. For one, Singapore has been one of the most successful nations to curb the spread of Covid-19. Among the three local banks, DBS has the largest exposure to Singapore. In FY2019, Singapore contributed more than 70% to its net profit of $6.39 billion. This dipped to 60% for the nine months to Sept 30 due to DBS’s conservative provisioning policy.

The other two Singapore banks have a larger regional footprint than DBS. Oversea-Chinese Banking Corp is expanding its foothold in North Asia following the acquisition of Wing Hang Bank, and United Overseas Bank is increasingly viewed as an Asean bank.

Singapore is in pole position to take off, since any economic recovery is likely to be closely tied with solving Covid-19. Of course economists remain cautious, as both developed and emerging economies grapple with second and third waves. Maybank Kim Eng expects GDP growth this year to rebound to 4.5%, near the lower end of the government’s 4–6% forecast range. Nonetheless, positive GDP growth is a reversal of the 5.8% contraction expected in 2020. Interestingly, GDP growth in 3Q2020 and 4Q2020 rebounded to 9.5% q-o-q and 2.1% q-o-q respectively.

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