In the recent 1Q16, the three local banks reported a mixed bag of results. Among the three banks, DBS was the only bank that exceeded consensus expectations on net profits. UOB’s results met expectations, while OCBC’s came in below consensus expectations.
1Q16: NII Was Key Difference
The key differentiator for the mixed result was non-Net Interest Income (NII). DBS outshone OCBC and UOB on the back of relatively resilient trade and loan-related fees, wealth management and trading thanks to its push into digital banking. On top of that, DBS had an additional boost from its Manulife bancassurance deal, which also performed better than expected. This resulted in a higher ROE of 11.9 percent vs. OCBC (10.1 percent) and UOB (10.2 percent).
Top Line Growth Muted
Previously, the market’s main concern was focused around the asset quality of Singapore banks, in particular their exposure to oil & gas and commodities. With 1Q16 having been resilient and the rally in oil & commodity prices, focus is likely to shift to top line growth for the rest of FY16.
Credit Suisse and CIMB believes that the operating backdrop remains challenging for the rest of FY16. While the banks guide that asset quality remains benign and their current provisioning levels are sufficient for FY16, it is still early in the credit cycle, and NPLs could worsen as FY17-18 approaches.
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
1Q16: NII Was Key Difference
The key differentiator for the mixed result was non-Net Interest Income (NII). DBS outshone OCBC and UOB on the back of relatively resilient trade and loan-related fees, wealth management and trading thanks to its push into digital banking. On top of that, DBS had an additional boost from its Manulife bancassurance deal, which also performed better than expected. This resulted in a higher ROE of 11.9 percent vs. OCBC (10.1 percent) and UOB (10.2 percent).
Top Line Growth Muted
Previously, the market’s main concern was focused around the asset quality of Singapore banks, in particular their exposure to oil & gas and commodities. With 1Q16 having been resilient and the rally in oil & commodity prices, focus is likely to shift to top line growth for the rest of FY16.
Credit Suisse and CIMB believes that the operating backdrop remains challenging for the rest of FY16. While the banks guide that asset quality remains benign and their current provisioning levels are sufficient for FY16, it is still early in the credit cycle, and NPLs could worsen as FY17-18 approaches.
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
0 comments:
Post a Comment