Interest Rates Are Soaring: Will Singapore’s Banks Benefit?

The Smart Investor2022-09-27

Change is in the air – one that has not arrived for the last 14 years.Yes, I am talking about how interest rates have surged in the last couple of months to levels not seen since 2008.The cause of ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

LearnerAdi
2022-09-28
LearnerAdi
Ok
benbent
2022-09-28
benbent
Also don't forget that a weak economy will impact wealth mgmt fees and investment banking fees
Deonc
2022-09-27
Deonc
Ok
SSVC
2022-09-27
SSVC
K
- Rattything:
  Ok
Road1Warrior
2022-09-27
Road1Warrior
Greed r not always good?
Happy returns
2022-09-27
Happy returns
Sg gov usually launch plenty of housing n infrastructure development during recession...straight forward no brainer is buy cement producer Pan United n Hong Leong Finance.

Leave a comment

143

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/1189552960?lang=en_US&edition=fundamental","thumbnail":"","is_english":true,"pubTime":"2022-09-27 09:49","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"1189552960","market":"sg","top_or_hot":-1,"title":"Interest Rates Are Soaring: Will Singapore’s Banks Benefit?","media":"The Smart Investor","content":"<div>\n<p>Change is in the air – one that has not arrived for the last 14 years.Yes, I am talking about how interest rates have surged in the last couple of months to levels not seen since 2008.The cause of ...</p>\n\n<a href=\"https://thesmartinvestor.com.sg/interest-rates-are-soaring-will-singapores-banks-benefit/\">Source Link</a>\n\n</div>\n","source":"lsy1602567310727","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>Interest Rates Are Soaring: Will Singapore’s Banks Benefit?</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\">\nInterest Rates Are Soaring: Will Singapore’s Banks Benefit?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-09-27 09:49 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://thesmartinvestor.com.sg/interest-rates-are-soaring-will-singapores-banks-benefit/><strong>The Smart Investor</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Change is in the air – one that has not arrived for the last 14 years.Yes, I am talking about how interest rates have surged in the last couple of months to levels not seen since 2008.The cause of ...</p>\n\n<a href=\"https://thesmartinvestor.com.sg/interest-rates-are-soaring-will-singapores-banks-benefit/\">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":"D05.SI","symbol_name":"星展集团控股","start_time":0,"source_url":"https://thesmartinvestor.com.sg/interest-rates-are-soaring-will-singapores-banks-benefit/","article_id":"1189552960","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1189552960","pubTimestamp":1664243387,"sourceInfo":{"source_id":"lsy1602567310727","name":"The Smart Investor"},"weMediaInfo":null,"summary":"Change is in the air – one that has not arrived for the last 14 years.Yes, I am talking about howinterest rateshave surged in the last couple of months to levels not seen since 2008.The cause of this change?The Federal Reserve has strongly suggested that it’s not done yet with rate increases.It foresees its policy rate rising faster than expected as it seeks to tame inflation and bring it back to the target 2% level.New projections now forecast that the rate could hit the 4.25% to 4.5% range by ","collect":0,"end_time":0,"defaultTopTitle":"thesmartinvestor.com.sg","property":[],"viewcount":null,"language":"en","relate_stocks":{"D05.SI":"星展集团控股","O39.SI":"华侨银行","U10.SI":"大华继显控股","U11.SI":"大华银行"},"translate_title":"利率飙升：新加坡的银行会受益吗？","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"D05.SI":0.9,"O39.SI":0.9,"U10.SI":0.9,"U11.SI":0.9},"content_text":"Change is in the air – one that has not arrived for the last 14 years.Yes, I am talking about how interest rates have surged in the last couple of months to levels not seen since 2008.The cause of this change?The US Federal Reserve as it stands determined to fight the highest inflation the US has witnessed in four decades.The rise has been steep and sudden, as pictured in the graph above.The Federal Funds Rate was hovering at near-zero levels at the start of 2022 but has now been raised to the range of 3% to 3.25% in five consecutive increases.Half a world away, Singapore banks are watching closely.After all, banks are known to be sensitive to interest rates due to their lending activities.How will these higher rates impact the three local lenders DBS Group(SGX: D05), United Overseas Bank Ltd(SGX: U11), or UOB, and OCBC Ltd(SGX: O39)?Repricing their loansHigher interest rates will allow all three banks to immediately re-price their loan offerings to higher rates..The most obvious area where rates are increasing is housing loans, which the majority of homeowners are saddled with.Back in late June, home loan rates were already hitting new highs as all three banks updated their home loan packages.Two-year fixed-rate loan packages for UOB’ hit 2.98% while DBS raised the interest rate for its two-year fixed-rate loan package to 2.75%.Then, just last week, both DBS and UOB announced that they were “reviewing” their fixed-rate home loans, with the latter pulling its two-year and three-year fixed rate packages from the market.The implication here is that both banks are due to raise rates even higher as they incorporate the latest news of the Federal Reserve rate hike.The result of all these moves should raise the net interest margins (NIM), and by extension, the net interest income, for all three lenders.DBS’ latest fiscal 2022 first half (1H2022) results show this rising trend clearly (see picture above).NIM had risen to 1.52% in 1H2022, up from the low of 1.43% in the second half of 2021.For the second quarter of 2022, NIM hit 1.58% and was much higher than the previous quarter’s 1.46%.In addition, CEO Piyush Gupta had also disclosed that July’s NIM was above 1.8%.The implications are clear: the swift rise in rates will strongly boost NIMs and lift the net interest income for all three banks.Is the Fed going overboard?The Federal Reserve has strongly suggested that it’s not done yet with rate increases.It foresees its policy rate rising faster than expected as it seeks to tame inflation and bring it back to the target 2% level.New projections now forecast that the rate could hit the 4.25% to 4.5% range by year-end and hit the 4.5% to 4.75% level by the end of 2023.Even at current interest rates, the US 30-year fixed-rate mortgages have risen to alarming levels, inching close to 6.3% recently, a 14-year high.Should the policy rate rise further, there is a probability of the mortgage rate hitting the 7% mark in the US and for Singapore’s fixed-rate home loan to breach the 4% level.While higher interest rates are good for their NIM, there are downsides to consider too.A sharp slowdown may loomHigher rates will not only cause more pain for homeowners who have to fork out higher interest payments.Corporations also rely heavily on loans to fund projects and capital expenditures.With higher loan rates, companies may pull back on their expansion plans and take on less debt, thus stunting the growth of the economy.And with more people tightening their belts due to a mix of high inflation and more expensive loans, consumer demand may also plunge in tandem.The result is that a recession may hit our shores and put many businesses in jeopardy.Banks will have to contend with two negative impacts should an economic slowdown occur.First, their loan growth will be impacted as fewer companies and individuals borrow.Next, more loans may also turn sour as borrowers find it tougher to service their principal and interest payments, resulting in higher provisions and a larger non-performing loans (NPL) ratio.Get Smart: The effects are uncertainThe above analysis shows that the effects of higher rates are uncertain for now.While the banks may enjoy higher NIMs in the interim, there is a chance that the economy may dive if rates go too high.Hence, investors need to be mindful of the pros and cons of higher interest rates and their effects on these financial institutions.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9918174403,"gmtCreate":1664345906702,"gmtModify":1676537437783,"author":{"id":"4107657165988180","authorId":"4107657165988180","name":"LearnerAdi","avatar":"https://community-static.tradeup.com/news/211b55c9f8f2d6aabdea5f1995a70d59","vip":1,"crmLevel":2,"crmLevelSwitch":1,"idStr":"4107657165988180","authorIdStr":"4107657165988180"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9918174403","repostId":1189552960,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9918179372,"gmtCreate":1664343929896,"gmtModify":1676537437448,"author":{"id":"4103722157908420","authorId":"4103722157908420","name":"benbent","avatar":"https://static.tigerbbs.com/421c7e7f132a348c8f100c2be258fedc","vip":1,"hat":"https://static.tigerbbs.com/a3dee1aa3a3a3c1814833a4d3f8a5669","crmLevel":2,"crmLevelSwitch":1,"idStr":"4103722157908420","authorIdStr":"4103722157908420"},"htmlText":"Also don't forget that a weak economy will impact wealth mgmt fees and investment banking fees","listText":"Also don't forget that a weak economy will impact wealth mgmt fees and investment banking fees","text":"Also don't forget that a weak economy will impact wealth mgmt fees and investment banking fees","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9918179372","repostId":1189552960,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9911734196,"gmtCreate":1664257406815,"gmtModify":1676537420375,"author":{"id":"3569316529855154","authorId":"3569316529855154","name":"Deonc","avatar":"https://static.tigerbbs.com/d9aa45dd2eb58357f6477dcfb99d1415","vip":1,"crmLevel":3,"crmLevelSwitch":1,"idStr":"3569316529855154","authorIdStr":"3569316529855154"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9911734196","repostId":1189552960,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9911477521,"gmtCreate":1664251382063,"gmtModify":1676537419250,"author":{"id":"3574906731000207","authorId":"3574906731000207","name":"SSVC","avatar":"https://static.tigerbbs.com/545a5ea462ff4ac7cc100bd3d8d97f72","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"3574906731000207","authorIdStr":"3574906731000207"},"htmlText":"K","listText":"K","text":"K","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/9911477521","repostId":1189552960,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":104119671,"gmtCreate":1664320859382,"gmtModify":1664320862596,"authorId":4102211517556300,"author":{"id":4102211517556300,"idStr":"4102211517556300","authorId":4102211517556300,"name":"Rattything","avatar":"https://community-static.tradeup.com/news/fedc3e8a4b9c1aed4dfad81a90af3f01","vip":1,"currentWearingBadge":{"badgeId":"a83d7582f45846ffbccbce770ce65d84-1","templateUuid":"a83d7582f45846ffbccbce770ce65d84","name":"Real Trader","description":"Completed a transaction","bigImgUrl":"https://static.tigerbbs.com/2e08a1cc2087a1de93402c2c290fa65b","smallImgUrl":"https://static.tigerbbs.com/4504a6397ce1137932d56e5f4ce27166","grayImgUrl":"https://static.tigerbbs.com/4b22c79415b4cd6e3d8ebc4a0fa32604","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2021.12.29","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":1100},"crmLevel":5,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9911477521,"type":1,"supId":0,"prevId":0,"content":"<span class=\"s1\">Ok</span>","text":"<span class=\"s1\">Ok</span>","html":"<span class=\"s1\">Ok</span>"}],"langContent":"EN"},{"id":9911479088,"gmtCreate":1664250039444,"gmtModify":1676537418939,"author":{"id":"4098084219326670","authorId":"4098084219326670","name":"Road1Warrior","avatar":"https://community-static.tradeup.com/news/444bc0aeceab5292f15cd24cd37ab6c3","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":4,"crmLevelSwitch":1,"idStr":"4098084219326670","authorIdStr":"4098084219326670"},"htmlText":"Greed r not always good?","listText":"Greed r not always good?","text":"Greed r not always good?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9911479088","repostId":1189552960,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9911470507,"gmtCreate":1664249991509,"gmtModify":1676537418858,"author":{"id":"4094644451233840","authorId":"4094644451233840","name":"Happy returns","avatar":"https://community-static.tradeup.com/news/77ae9aa47575af7cbf8f38861c3fffbd","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"4094644451233840","authorIdStr":"4094644451233840"},"htmlText":"Sg gov usually launch plenty of housing n infrastructure development during recession...straight forward no brainer is buy cement producer Pan United n Hong Leong Finance.&nbsp;","listText":"Sg gov usually launch plenty of housing n infrastructure development during recession...straight forward no brainer is buy cement producer Pan United n Hong Leong Finance.&nbsp;","text":"Sg gov usually launch plenty of housing n infrastructure development during recession...straight forward no brainer is buy cement producer Pan United n Hong Leong Finance.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9911470507","repostId":1189552960,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":143,"commentSize":13,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1189552960"}