Singapore banks

Net interest margins to moderate earnings for banks in 2020: RHB

SINGAPORE (Dec 23): RHB Group Research is maintaining the three local banks -- DBS Group Holdings, UOB and Oversea-Chinese Banking Corp -- at “neutral” after their combined net profit is expected to come in flat y-o-y while net interest income (NII) growth is expected to be flattish too, given guidance from the banks of net interest margin (NIM) pressure and soft loan growth.

Singapore banks poised to deliver dividend yields among highest across region, says Maybank

SINGAPORE (Sept 26): Maybank Kim Eng Research forecasts that the Singapore banks will deliver a dividend yield of 5.2% for FY2020E – among the highest in the region.

This comes despite gross non-performing loans (NPLs) estimated to rise by 30 basis points to 1.71% by FY2021E.

“With 93% provisioning coverage and strong core-Tier 1, the sector offers good 2020E dividend visibility,” says analyst Thilan Wickramasinghe in a Sept 24 report, noting that the Singapore banks have been actively lowering risk in their business mix.

Singapore banks have good dividend visibility, but non-performing loans pose an increasing risk: Maybank

SINGAPORE (Sept 12): Singapore banks seem to be a cut above the rest in Asean, offering some of the highest dividends and ranking among the cheapest in price-to-equity (PE) terms, bolstered by strong balance sheets. 

But a recent report from Maybank Kim Eng which uses artificial intelligence, has revealed that the biggest threat to the appeal of Singapore banks appears to overseas lending – which accounts for 63% of incremental loan growth for Singapore banks. In turn, this affects the banks’ non-performing loan (NPL) figures. 

UOB is DBS's top pick while OCBC is cut to 'hold' on dividend policy overhang

SINGAPORE (June 25): DBS Group Research is retaining United Overseas Bank (UOB) as its top pick among Singapore banks while Oversea-Chinese Banking Corporation (OCBC) has been downgraded to “hold” with a target price of $11.50.

DBS likes UOB for its high dividend yield of 4.7%, strong capital profile and least exposure to Greater China. However, OCBC’s dividend policy could continue to weigh on its share price performance while inorganic growth opportunities may encounter execution risks.

Virtual banks not a threat to Singapore banks – for now, says CGS-CIMB

SINGAPORE (June 20): The Monetary Authority of Singapore (MAS) is studying the potential for opening the doors to “digital-only banks with non-bank parentage”.

But CGS-CIMB Research dismisses fears that such virtual banks on could put a dent in the market share of incumbents DBS Group Holdings (DBS), Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB) – at least for now.

“We think that virtual banks are not likely to threaten the primary lending businesses of DBS, OCBC and UOB in the near term,” says lead analyst Andrea Choong in a report on Wednesday.

CGS-CIMB keeps UOB as top bank sector pick despite underperforming NIM expansion

SINGAPORE (June 3): CGS-CIMB Research is keeping United Overseas Bank (UOB) as its top pick among the Singapore banks, despite the bank’s NIM expansion underperforming compared to its peers.

According to lead analyst Andrea Choong, UOB’s valuations are inexpensive at 1.0 times FY19F price-to-book value (P/BV) – close to 1 standard deviation below its long-term mean. The bank also offers a FY19F dividend yield of 5.1%.

RHB stays 'overweight' on Singapore banks as MAS keeps policy unchanged

SINGAPORE (Apr 15): RHB Group Research is maintaining its “overweight” call on Singapore banks, after the Monetary Authority of Singapore (MAS) on Friday kept its monetary policy settings unchanged amid a worsening global growth outlook and low inflation.

MAS uses the exchange rate as its main policy tool. After tightening policy twice last year, the central bank last week left the slope and width of the currency band unchanged, as well as the level at which it is centred.

MAS says the stance is “consistent with a modest and gradual appreciation path” of the currency band.

DBS, UOB poised for better NIMs and higher dividend yields, says Maybank

SINGAPORE (Feb 13): Maybank Kim Eng remains positive on the outlook of Singapore’s banking sector, with DBS and United Overseas Bank as its top picks for their gearing towards better net interest margins (NIMs) as well as better dividend-yield visibility.

This comes ahead of the release of DBS’s 4Q18 results on Feb 18, followed by UOB and Oversea-Chinese Banking Corporation (OCBC), rated “hold” with a target price of $10.95, on Feb 22.  

Banking on banks

SINGAPORE (Feb 1): Banks are increasingly turning into yield plays, which tend to do well when interest rates are not rising sharply.

And analysts expect the three local banks to continue to experience slow and steady growth this year and into 2020, global financial crises notwithstanding.

In a recent interview with The Edge Singapore, Harsh Modi, banking analyst at JPMorgan for Southeast Asia, indicated that Singapore banks stood out as the most visible in terms of margins and loan growth.

Why UOB is the better of two 'buys', according to DBS

SINGAPORE (Dec 4): DBS Vickers Securities is maintaining its “buy” for United Overseas Bank (UOB) and Oversea-Chinese Banking Corp (OCBC) with target prices of $29.50 and $13.20.

In a Tuesday report, analyst Lim Rui Wen notes that UOB is offering close to 5% yield and OCBC, at around 4%.

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