Singapore banks are expected to benefit as their margins are propped up by higher-for-longer interest rates, but headwinds remain in areas such as loan demand, said analysts.
DBS Group Holdings and OCBC Bank started the year strong with earnings that rose to new highs, boosted by factors such as higher fee income due to stronger market sentiment.
However, UOB had a muted start to 2024 as its net profit fell 2 per cent to $1.49 billion, amid higher funding costs and increased competition for high-quality loans.
Mr Willie Tanoto, a senior director in Fitch Ratings' Asia-Pacific financial institutions team, told The Straits Times that higher-forlonger interest rates have lengthened the runway for the three banks' net interest margins (NIMS), and expects that this will help the lenders sustain revenues above 2023's record levels.
"Market expectations of delayed US Fed rate cuts are keeping asset yields high, but as banks get more clarity that rates have peaked, they are able to adapt their funding strategies to reduce deposit costs," he said.
The banks' chiefs said in their results briefings that they were optimistic about their NIMS, which measure the difference between the interest income earned by banks and the amount of interest paid out to depositors.
This comes as the US Federal Reserve has held interest rates steady, even as it earlier predicted three rate cuts in 2024.
Bu hikaye The Straits Times dergisinin May 14, 2024 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye The Straits Times dergisinin May 14, 2024 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
THE NEW BERNABEU A REAL PROBLEM
Locals and neighbourhood residents hate noise from concerts and construction work
Japan seek to beat the heat and Saudi Arabia
HONG KONG - Japan face second-placed Saudi Arabia in Group C of Asia's third round of World Cup qualifiers in Jeddah on Oct 10, looking to continue their prolific start as top-of-the-table clashes take centre stage across the continent.
Police investigating Spanish pair over protests in S'pore
A Spanish man and woman in their 30s are assisting the police with investigations after photos appeared on social media of the man holding a banner in various parts of Singapore to protest against Singaporean business magnate Peter Lim, who owns Spanish top-tier football club Valencia.
FROM SAUDI SPLURGE TO SPENDING SLUMP
Football transfer outlay drops in 2024 as officials assess the commercial returns
Future looks bright for America's Cup: Ainslie
BARCELONA - Sailing has a great opportunity to develop as a sport if the America's Cup can involve more frequent events and evolve the boats now being raced, according to British skipper Ben Ainslie.
Sport can be 'solution multiplier' for climate
LONDON – Sports clubs and organisations must raise their game and become leaders in the battle to prevent catastrophic climate change, Sport England chairman Chris Boardman said on Oct 8.
SINNER TO BE GIVEN NO QUARTER
Medvedev vows to put up a better fight against world No. 1 in Shanghai last eight
Ryder Cup captains won't exclude LIV Golf players
NEW YORK - Ryder Cup captains Keegan Bradley and Luke Donald said on Oct 8 that they will not shy away from including LIV Golf players in their respective teams for the 2025 biennial showdown between the United States and Europe.
MISTY SWIFT EARNS EVEN MORE FANS AT TRIALS
Ex-Kranji runner No More Delay also struts his stuff at hit-outs
MediShield Life can be made more effective. Its review holds the key
We must incentivise outpatient treatment and accept that, in some cases, personalised medicine can save lives.