Singapore banks 'ploughing ahead', with 2QFY2023 results beating CLSA's conservative estimates

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Singapore banks 'ploughing ahead', with 2QFY2023 results beating CLSA's conservative estimates

Jovi Ho2023-08-10

CLSA analysts believe NIMs will peak out at end-2023. Singapore’s banks are “ploughing ahead”, admit CLSA analysts Neel Sinha and Lin Daxin, as the trio’s results for 2QFY2023 ended June beat their ...

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Singapore’s banks are “ploughing ahead”, admit CLSA analysts Neel Sinha and Lin Daxin, as the trio’s results for 2QFY2023 ended June beat their ...</p>\n\n<a href=\"https://www.theedgesingapore.com/capital/brokers-calls/singapore-banks-ploughing-ahead-2qfy2023-results-beating-clsas-conservative?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS\">Source Link</a>\n\n</div>\n","source":"edge_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Singapore banks 'ploughing ahead', with 2QFY2023 results beating CLSA's conservative estimates</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSingapore banks 'ploughing ahead', with 2QFY2023 results beating CLSA's conservative estimates\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-08-10 04:52 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.theedgesingapore.com/capital/brokers-calls/singapore-banks-ploughing-ahead-2qfy2023-results-beating-clsas-conservative?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS><strong>Jovi Ho</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>CLSA analysts believe NIMs will peak out at end-2023. Singapore’s banks are “ploughing ahead”, admit CLSA analysts Neel Sinha and Lin Daxin, as the trio’s results for 2QFY2023 ended June beat their ...</p>\n\n<a href=\"https://www.theedgesingapore.com/capital/brokers-calls/singapore-banks-ploughing-ahead-2qfy2023-results-beating-clsas-conservative?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0831103253.SGD","symbol_name":"JPMorgan Funds - Asia Pacific Income A (mth) SGD","start_time":0,"source_url":"https://www.theedgesingapore.com/capital/brokers-calls/singapore-banks-ploughing-ahead-2qfy2023-results-beating-clsas-conservative?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS","article_id":"2358701143","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2358701143","pubTimestamp":1691614336,"sourceInfo":{"source_id":"edge_highlight","name":"Edge"},"weMediaInfo":null,"summary":"CLSA analysts believe NIMs will peak out at end-2023. ","collect":0,"end_time":0,"defaultTopTitle":"theedgesingapore.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0831103253.SGD":"JPMorgan Funds - Asia Pacific Income A (mth) SGD","U11.SI":"大华银行","LU0865486749.SGD":"Eastspring Investments - Asian Equity Income AS SGD-H","SGXZ58947870.SGD":"LIONGLOBAL SINGAPORE DIVIDEND EQUITY (SGDHDG) INC","BK6112":"综合性银行","LU1048588211.SGD":"Blackrock Asian Dragon A2 SGD-H","LU0577902371.SGD":"FULLERTON LUX FUNDS - ASIA GROWTH & INCOME EQUITIE \"I\" (SGD) ACC","LU0384037296.USD":"ALLIANZ ASIAN MULTI INCOME PLUS \"AT\" (USD) ACC","O39.SI":"华侨银行","LU0557290698.USD":"施罗德环球可持续增长基金","LU0572940350.SGD":"Janus Henderson Horizon Asian Dividend Income A3 SGD","LU0128522157.USD":"TEMPLETON ASIAN GROWTH \"A\" ACC","SG9999000327.SGD":"Schroder Asian Growth A Dis SGD","LU0516422952.EUR":"FULLERTON LUX FUNDS - ASIA FOCUS EQUITIES \"I\" (EUR) ACC","LU0029875118.USD":"TEMPLETON ASIAN GROWTH \"A\" INC","SG9999001689.USD":"施罗德亚洲成长股票","LU1988902786.USD":"FULLERTON LUX FUNDS GLOBAL ABSOLUTE ALPHA \"I\" (USD) ACC","SG9999005177.SGD":"Legg Mason Martin Currie - Southeast Asia Trust A Acc SGD","BK6516":"银行与投资服务概念","LU0264606111.USD":"Janus Henderson Horizon Asian Dividend Income A2 USD","LU0577902538.SGD":"Fullerton Lux Funds - Asia Growth and Income Equities A Acc SGD","D05.SI":"星展集团控股","LU0672654166.SGD":"FTIF - Templeton Asian Growth A (acc) SGD-H1","LU0577902454.USD":"FULLERTON LUX FUNDS - ASIA GROWTH & INCOME EQUITIE \"I\" (USD) ACC","LU0588545904.SGD":"Eastspring Investments - Asian Equity Income ASDM SGD","BK6523":"ESG概念","SG9999002604.SGD":"LionGlobal Singapore/Malaysia SGD","LU0588545730.USD":"EASTSPRING INVESTMENTS ASIAN EQUITY INCOME \"ADM\" (USD) INC","LU0831093199.SGD":"HSBC GIF MANAGED SOLUTIONS ASIA FOCUSED INCOME \"AM3\" (SGDHDG) INC","SG9999001846.SGD":"Schroder Asian Equity Yield A Dis SGD","SG9999001135.SGD":"United ASEAN Fund SGD","LU0572939691.SGD":"Janus Henderson Horizon Asian Dividend Income A2 SGD","SG9999004360.SGD":"Nikko AM Shenton Thrift Fund SGD","SG9999003800.SGD":"Nikko AM Global Dividend Equity Acc SGD-H","LU0048573645.USD":"富达东盟基金","LU0084288322.USD":"Natixis Asia Equity RD USD","LU1242518931.SGD":"Fullerton Lux Funds - Asia Absolute Alpha A Acc SGD","LU1282649067.USD":"ALLIANZ ASIAN MULTI INCOME PLUS \"AMG\" (USD) INC A","SG9999014492.USD":"NIKKO AM ASEAN EQUITY \"A\" (USD) ACC","LU1048596156.SGD":"Blackrock Asian Growth Leaders A2 SGD-H","LU1282649810.SGD":"Allianz Asian Multi Income Plus Cl AMg DIS H2-SGD","SG9999000459.SGD":"Aberdeen Standard Pacific Equity SGD","LU0955669360.SGD":"Schroder ISF Asian Dividend Maximiser A Dis SGD","CLSA":"Cabana Target Leading Sector Aggressive ETF","LU0348814723.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"A\" (USD) INC  NC","LU0878005551.USD":"UBS (LUX) KEY SELEC ASIA ALLOCATION OPPORTUNITY (USD) \"P\" (USD) ACC","LU0979878070.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"A\" (USD) ACC","LU0532188223.SGD":"JPMorgan Funds - ASEAN Equity A (acc) SGD","LU1130305938.SGD":"Schroder ISF Asian Dividend Maximiser A Dis SGD-H"},"translate_title":"新加坡银行业“勇往直前”，2023财年第二季度业绩超出里昂证券的保守预期","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CASA":1,"CLSA":1,"U11.SI":0.9,"D05.SI":0.9,"O39.SI":0.9},"content_text":"CLSA analysts believe NIMs will peak out at end-2023. Singapore’s banks are “ploughing ahead”, admit CLSA analysts Neel Sinha and Lin Daxin, as the trio’s results for 2QFY2023 ended June beat their estimates by 5%-17%. Among them, DBS D05 was the “most convincing beat of the three”, and the CLSA analysts believe higher dividends “should be a focus”.\nUnited Overseas Bank (UOB) U11 announced its 1HFY2023 results on July 27, while DBS and Oversea-Chinese Banking Corporation (OCBC) O39 released their results on Aug 3 and Aug 4 respectively.\nIn an Aug 7 note, Sinha and Lin maintain “overweight” on all three banks, with target prices of $43.14 on DBS, $16.20 on OCBC and $39.70 on UOB. Among the three, CLSA prefers DBS, followed by UOB and OCBC, in that order; but the house’s target price forecasts the highest upside from UOB at 37.8% against its Aug 6 closing price of $28.80.\nSinha and Lin were relatively more pessimistic compared to the other houses here, as the banks’ results fared -2% to 13% compared to consensus forecasts. \nWhile loans are still “anaemic”, Sinha and Lin note that the banks’ net interest margins (NIMs)  are likely to hold higher. “Pre-results, we were expecting NIMs at around 2.06%-2.12% for DBS, 2.23%-2.25% for OCBC and 2.15%-2.20% for UOB. All three were in line or higher boosted by Fed rate hikes late last quarter, initially not expected.”\nNow, Sinha and Lin believe NIMs will peak out at end-2023. DBS indicates a possibility of upside bias through 2HFY2023 while OCBC and UOB indicate it should generally hold firm at current levels. \nThe CLSA analysts note that asset yields have been firm for all three. “The variability on NIMs has more to do with the potential for Fed changing direction and, deposit costs catching up with the customary four- to six-month lag behind asset book repricing.”\nLoan growth remains soft, down 1% q-o-q for DBS and up 1% for OCBC and UOB. “DBS [was] affected a tad more as Hong Kong Interbank Offered Rate (HIBOR) has gone up in the past quarter and many of their North Asia [and] Greater China customers find it cheaper to borrow onshore with lower rates and a weaker currency. We expect loan growth [to be] a 2HFY2024 narrative after the Fed cycle turns.”\nWealth still has growth headroom \nThe banks’ non-interest income, roughly a third of total income, was a mixed bag at -3% to 5% q-o-q growth, say Sinha and Lin.\nWealth and cards were generally the stand-outs while other areas like transaction fees and loan fees were softer due to the macro-environment and Singapore’s property cooling measures, they add.\n“We think wealth fees have further upside as net new money inflows have continued to be strong at $7 billion to $16 billion for the three banks,” write Sinha and Lin. \nAccording to them, the estimated assets under management (AUM) for DBS is now at $303 billion, OCBC at $270 billion and UOB at $160 billion. “The fees have not grown at the same pace as AUM in recent quarters given risk aversion in markets and investors choosing to sit on the side-lines with deployment in deposits rather than investments.”\nCard fees could also hold some upside too as travel recovery still has some way to go with Singapore arrivals at some 80%-82% of pre-pandemic levels, write Sinha and Lin. \nDBS has explicitly mentioned this should be a record year for net profits after tax, say Sinha and Lin. “While the other two banks were not explicit, we expect the same for them.”\nDividends for OCBC and UOB were in line with expectations, while DBS was a 14% positive surprise at 48 cents per share interim dividend, write the CLSA analysts. “Management indicated that the board determined the bank has $1.20/share in excess capital, which it should return to shareholders over a two- to three-year timeframe.”\nBanks as proxy to Asean\nMeanwhile, UOB Kay Hian Research analyst Jonathan Koh highlights that the banks are a proxy to growth in Asean countries. “Asean countries have a large combined population of 680 million and account for about 8% of global exports. Many multinational companies have adopted the China+1 strategy and plan to set up alternative production facilities within the Asean region.”\nMalaysia, Thailand, Indonesia and Vietnam are seeing growth in foreign direct investments, writes Koh. OCBC and UOB benefit from the reorientation of supply chains due to their extensive network within Asean countries. \nIn an Aug 7 note, Koh maintains “overweight” on DBS and OCBC with target prices of $44.35 and $18.22 on DBS and OCBC respectively. OCBC is his top pick for its new dividend policy with a payout ratio of 50%, as well as its focus on Asean a “defensively low” 2024 price-to-book ratio (P/B) of 1.03x.\nDBS and OCBC outperform in NIM expansion, says Koh. DBS and OCBC registered more sizeable NIM expansions of 58 basis points (bps) and 55 bps y-o-y respectively in 2QFY2023, compared to UOB’s 45 bps. “We attribute the steeper NIM expansion to DBS’s and OCBC’s higher current accounts and savings accounts (CASA) ratios of 56% and 45% respectively, [compared to] UOB’s 48%.”\nThus, DBS and OCBC were able to achieve stronger growth in net interest income of 40% and 40% y-o-y respectively, compared to UOB’s 31% y-o-y growth. \nDBS outperforms in fee income generation, adds Koh. “DBS’s fee income grew 7% y-o-y, the first y-o-y increase in six quarters, with the recovery led by wealth management and cards. OCBC and UOB saw fee income languish by -10% and -8% y-o-y respectively. Their wealth management fees also declined 16% and 3% y-o-y respectively.”\nAs at 12.24pm, shares in DBS are trading 23 cents lower, or 0.67% down, at $34.07; while shares in OCBC are trading 6 cents higher, or 0.46% up, at $13.22; and shares in UOB are trading 9 cents higher, or 0.31% up, at $29.05.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"hasMoreComments":false,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}