Singapore Banking Monthly - Phillip Securities 2021-01-05: Waiting Game

Singapore Banking Monthly - Phillip Securities  | SGinvestors.io DBS GROUP HOLDINGS LTD (SGX:D05) OVERSEA-CHINESE BANKING CORP (SGX:O39) UNITED OVERSEAS BANK LTD (SGX:U11)

Singapore Banking Monthly - Waiting Game

  • December interest rates were at 4Q20 averages.
  • Loans shrank 2.32% y-o-y in November, extending their weak outlook as business loans contracted more than consumer loans for the first time since 2018.
  • Capital-market SDAV/DDAV grew 14%/11% y-o-y in December, auguring well for SGX.
  • Maintain NEUTRAL. Our picks for sector exposure are SGX (SGX:S68), given sustained market participation, and UOB (SGX:U11) for its lower specific provisions and better credit outlook.



NIMs fell in 3Q20 on subdued interest rates

  • 4Q20 3M-SIBOR/3M-SOR of 0.41%/0.18% were 35bps lower than 9M20 levels. As a result, banks’ NIMs in 4Q20 are expected to come in at 3Q20 levels, for a full-year average of 1.60%.
  • Current 3M-SOR is up 3bps from the average observed in 4Q20. 3M-SIBOR is at its 4Q20 average. Despite low interest rates, rate stability should provide opportunities for banks to better price asset yields to boost margins in FY21.


Lending worsened in November

  • Loans contracted 2.32% y-o-y in November, worse than their decline of 2% in October.
    • Business loans performed poorer than consumer loans for the first time since February 2018, shrinking 2.66% y-o-y.
    • Consumer loans slipped 1.76%, though they grew 0.42% m-o-m in their fifth consecutive month of growth. Growth was largely attributed to credit-card loan growth of 3.0% m-o-m.


Commendable market activities despite holiday season

  • SGX's preliminary Securities Daily Average Value (SDAV) for December of S$1,094mil indicates a y-o-y increase of 14% from S$960mil in December 2019. This puts SDAV for 1H21 at S$1,267mil, up 19% y-o-y.
  • SGX's Derivatives Daily Average Value (DDAV) was 8% higher y-o-y in November at 0.93mil. Volume for the top 5 equity index futures grew 11.0% y-o-y, showing promising data for December.
  • Turnover volume for SGX’s newly-launched FTSE Taiwan Index Futures was 2.1mil in December, overtaking the performance of its MSCI predecessor a year ago by 20.2%.
  • With sustained levels of market participation, we expect SGX’s revenue to increase 10-15% y-o-y in 1H21.

Investment Actions


Remain NEUTRAL.






Tay Wee Kuang Phillip Securities Research | https://www.stocksbnb.com/ 2021-01-05
SGX Stock Analyst Report NEUTRAL MAINTAIN NEUTRAL 22.600 SAME 22.600
NEUTRAL MAINTAIN NEUTRAL 9.680 SAME 9.680
NEUTRAL MAINTAIN NEUTRAL 21.100 SAME 21.100



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