Maybank Kim Eng is keeping its “negative” rating on the local banking sector due to slowing slowing topline growth, rising non-performing loans and capital constraints.
To recap, the Monetary Authority of Singapore (MAS) announced the results for June’s Singapore Savings Bonds (SSB) last Friday, revealing that the take-up rate has fallen to 7.3% this month, with YTD issuances amounting to a mere $164 million.
In a Monday report, analyst Ng Li Hiang says that the low demand for SSBs may be attributed to lower average returns resulting from declining Singapore government securities bond yields. Another reason could be competitive fixed deposit (FD) rates offered by banks in Singapore.
“Yields have been coming down for the past five issuances, thereby making SSBs unappealing,” notes Ng. He explains that due to SSBs’ position as “safe and long-term saving products”, early withdrawal will result in lower rates compared to banks’ promotional rates for FDs, making FDs a more appealing option for those looking to make short-term deposits.
Ng doubts banks will be in a hurry to price liabilities aggressively against a “slow and cautious” landscape, and hence expects net interest margin securities to remain flat.
UOB remains Maybank’s top pick with a “hold” rating, due to its greater ability to reprice rates in an adverse lending environment and its lower exposure to commodities and China.
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To recap, the Monetary Authority of Singapore (MAS) announced the results for June’s Singapore Savings Bonds (SSB) last Friday, revealing that the take-up rate has fallen to 7.3% this month, with YTD issuances amounting to a mere $164 million.
In a Monday report, analyst Ng Li Hiang says that the low demand for SSBs may be attributed to lower average returns resulting from declining Singapore government securities bond yields. Another reason could be competitive fixed deposit (FD) rates offered by banks in Singapore.
“Yields have been coming down for the past five issuances, thereby making SSBs unappealing,” notes Ng. He explains that due to SSBs’ position as “safe and long-term saving products”, early withdrawal will result in lower rates compared to banks’ promotional rates for FDs, making FDs a more appealing option for those looking to make short-term deposits.
Ng doubts banks will be in a hurry to price liabilities aggressively against a “slow and cautious” landscape, and hence expects net interest margin securities to remain flat.
UOB remains Maybank’s top pick with a “hold” rating, due to its greater ability to reprice rates in an adverse lending environment and its lower exposure to commodities and China.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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