Singapore Banks Share Price
SIBOR
DBS GROUP HOLDINGS LTD
SGX:D05
OVERSEA-CHINESE BANKING CORP
SGX:O39
UNITED OVERSEAS BANK LTD
SGX:U11
Singapore Banking Monthly - SIBOR And SOR Set To Soar
- Singapore’s domestic loans rose 5.5% y-o-y in July.
- Loans growth in Hong Kong winding down to 9.5% in July.
- 3-month SIBOR spiked to 10-year high in August.
- Upgraded to BUY for the Singapore Banking Sector.
Singapore’s domestic loans in July grew 5.5% y-o-y
- Loans growth was driven by business loans that rose 6.6% y-o-y. Consumer loans growth in July was +4.0% y-o-y, the lowest in a year. Car loans grew +8.6% y-o-y, sustaining last month’s strong performance.
- Singapore’s economy is still seeing healthy growth and we do not expect July’s property cooling measures to drag down loans growth for the full year.
- July’s loans growth for building and construction rose +5.4%, the highest in 2 years; while mortgage loans +4.0% y-o-y, keeping pace with c.4% y-o-y trendline growth.
Hong Kong’s loans in July grew 9.5% y-o-y – slowest in 1.5 years
- Hong Kong’s loans growth was mainly driven by its domestic currency loans. According to JLL Hong Kong, July residential sales volume and value were down -9.3% m-o-m and -4.1% m-o-m respectively.
- The new vacancy tax levy announced in June could prompt developers to launch more affordable and small-scaled housings, to make it easier for buyers to absorb housing prices in smaller portions.
~ SGinvestors.io ~ Where SG investors share
SIBOR continues to break multi-year highs
- 3-month SIBOR rose in August to 10-year highs. With 2 more Fed rate hikes in 2018, NIM expansion continues to be a catalyst. Despite the 50bps increase in 3-month SIBOR this year, mortgage loans growth has remained resilient at 4.0% y-o-y. 3-month SOR maintained its strong ascent this year, the highest in almost 3 years.
- Average 3-month SOR YTD increased 79.4% y-o-y. Meanwhile, savings rate in Singapore remained unchanged at 0.16%.
Oil and gas sector recovering but challenges remain
- Global jack up utilisation rate has bottomed out in February and been on a continuous ascend since. While August’s utilisation rate peaked to the highest in almost 2.5 years. Day rate in August maintained July’s rate, breaking a 6 months continuous descend. The O&G sector continues to face the issue of oversupply which makes it difficult to increase prices.
- In addition, we think that Trump’s steel and aluminium tariffs might increase the costs of projects in the O&G industry, posing a drag in recovery. O&G NPL has stabilised and is unlikely to worsen this year; with some banks even making recoveries in NPL in 2Q18.
INVESTMENT ACTIONS
Upgraded Singapore Banking Sector to BUY.
- We are positive on the sector’s outlook where continued NIM expansion, loans book expansion and capacity for higher dividends, could catalyse share prices further.
- We expect NIM upside to offset any downside in loans growth for FY18 due to property cooling measures and trade war tensions. We believe that housing loans growth for 2H18 should remain strong due to the drawdown of previously approved loans.
- The slight negative in trade loans slowdown may be offset by positive surprises in NIM expansion and recoveries in the O&G sector.
- In conclusion, banks continue to enjoy dual drivers of expanding loan volume and interest margins this year.
| Rating | Forecast Dividend (SGD) | Target Price (SGD) | Total Return | |
|---|---|---|---|---|
| DBS Group Holdings (SGX:D05) | BUY (Upgraded) | 1.20 | 33.32 | 38.36% |
| Oversea-Chinese Banking Corp (SGX:O39) | BUY (Upgraded) | 0.37 | 14.90 | 35.13% |
| United Overseas Bank Limited (SGX:U11) | BUY (Upgraded) | 1.05 | 34.50 | 31.37% |
Tin Min Ying
Phillip Securities Research
|
https://www.stocksbnb.com/
2018-09-03
SGX Stock
Analyst Report
33.320
Same
33.320
14.900
Same
14.900
34.500
Same
34.500
