In 1Q2016, shares in DBS Group Holdings, Oversea-Chinese Banking Corp and United Overseas Bank were reeling on concerns of a surge in non-performing loans (NPLs) triggered by rising interest rates, slumping commodity prices and an uncertain economic outlook in China.
As banks head into their 2Q2016 reporting season, bank stocks have recovered somewhat, but they have not reached their 1Q2016 highs. One reason is that commodity prices have recovered somewhat, and another is that China appears to be muddling along. More importantly, with Brexit and volatile job numbers in the US, there is a growing consensus in the market that major central banks around the world will keep monetary policy looser for longer.
Yet, that could hurt earnings at the local banks, which are due to begin reporting their 2Q2016 financial results this coming week.
Net interest income (NII) contributes more than half of the banks total income, and all three of them did fairly well in 1Q2016 because of wider net interest margins (NIMs).
However, the three-month Swap Offer Rate and three-month Singapore Interbank Offered Rate have been sliding since 1Q2016. That could mean tighter NIMs weighing on NII at the banks.
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As banks head into their 2Q2016 reporting season, bank stocks have recovered somewhat, but they have not reached their 1Q2016 highs. One reason is that commodity prices have recovered somewhat, and another is that China appears to be muddling along. More importantly, with Brexit and volatile job numbers in the US, there is a growing consensus in the market that major central banks around the world will keep monetary policy looser for longer.
Yet, that could hurt earnings at the local banks, which are due to begin reporting their 2Q2016 financial results this coming week.
Net interest income (NII) contributes more than half of the banks total income, and all three of them did fairly well in 1Q2016 because of wider net interest margins (NIMs).
However, the three-month Swap Offer Rate and three-month Singapore Interbank Offered Rate have been sliding since 1Q2016. That could mean tighter NIMs weighing on NII at the banks.
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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