Will Banks Suffer From The Escalating Trade Tension?

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Singapore’s commercial banking sector is firing on all cylinders, as seen from the strong Q118 results of DBS, OCBC, and UOB, and we are positive on the sector’s outlook over the coming quarters. Healthy loan growth, stable asset quality, and well-capitalised balance sheets are tailwinds for the city’s banks.

Cause for optimism

We remain optimistic on the prospects of the Singapore commercial banking sector over the coming quarters as it is likely to benefit from relatively healthy loan growth, stable asset quality, and robust capital adequacy. Indeed, Singaporean banks are performing well, according to Q118 results released by the city’s three biggest local banks, DBS, OCBC, and UOB. Their respective net profits grew by 26% y-o-y, 14% y-o-y, and 21% y-o-y to $1.5b, $1.1b, and $978b. The equities of these three financial institutions have also achieved strong gains, averaging 36.4% in terms of price increase over the past 12 months, and they remain on an uptrend.