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Singapore Banking Monthly - Phillip Securities 2022-02-09: Interest Rates Down In January

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

Singapore Banking Monthly - Interest Rates Down In January

  • January’s 3M-SOR down m-o-m, 3M-SIBOR remains flat.
  • Hong Kong’s domestic loans growth increased 3.79% y-o-y in December . Malaysia’s domestic loans growth increased 4.51% y-o-y and rose 0.53% m-o-m in December.
  • Our 4Q21e PATMI estimates are: DBS (SGX:D05) (S$1.4bn), UOB (SGX:U11) (S$1.3bn) and OCBC (SGX:O39) (S$1.1bn). Valuations for OCBC are the most attractive and largest upside surprise from dividends.
  • Maintain OVERWEIGHT. We remain positive on banks. Bank dividend yields are attractive with upside surprise due to excess capital ratios. Improving economic conditions and rising interest rates remain tailwinds for the banking sector. SGX (SGX:S68) is another beneficiary of higher interest rates.



3M-SOR down slightly in January, 3M-SIBOR remained flat

  • Interest rates were down slightly in January. The 3M-SOR was down 5bps m-o-m to 0.32% while the 3M-SIBOR remained flat m-o-m at 0.44%. The 3M-SOR is 1bps higher than its 4Q21 average of 0.31% and has improved by 12bps y-o-y. The 3M- SIBOR is flat against its 4Q21 average of 0.44% and has improved by 4bps y-o-y.


Hong Kong and Malaysia loans growth continued in December

  • Hong Kong’s domestic loans growth increased to 3.79% y-o-y, but fell by 0.84% m-o-m in December. The loans growth for December showed a slight dip from the previous month, but it was still the fourth highest positive loans growth y-o-y recorded for 2021.
  • Malaysia’s domestic loans growth saw an increase of 4.51% y-o-y in December and rose 0.53% m-o-m in December. The increase y-o-y in December was the highest recorded since May 2019.


Volatility fell as Singapore enters the Stabilisation Phase

  • Preliminary SDAV for January fell 20% y-o-y to $1,194mil, as the COVID-19 situation stabilised in Singapore and community cases continue to fall. The VIX averaged 23.2 in January, up from 20.9 in the previous month.
  • The top five equity index futures turnover saw an increase of 1.7% y-o-y in January to 14.99mil contracts mainly due to the higher trading volumes of its Nifty 50 Index Futures and Nikkei 225 Index Futures . Notably, the FTSE China A50 Index Futures increased 4.9% m-o-m to 8.6mil despite the introduction of HKEX’s MSCI China A50 Connect Index futures and the FTSE Taiwan Index Futures increased 23% m-o-m to 1.1mil.


Bank’s 4Q21 Results Forecast

  • The 3 local banks will be releasing their 4Q21 results this month, with DBS on 14 Feb, UOB on 16 Feb and OCBC on 23 Feb.
  • For DBS (SGX:D05), we have forecasted revenue of S$3.18bn for 4Q21 (consensus estimate: S$3.61bn) and PATMI of S$1.4bn (consensus estimate: S$1.48bn).
  • For UOB (SGX:U11), we have forecasted revenue of S$2.66bn (consensus estimate: S$2.52bn) for 4Q21 and PATMI of S$1.3bn (consensus estimate: S$0.97bn).
  • For OCBC (SGX:O39), we have forecasted revenue of S$2.45bn (consensus estimate: S$2.7bn) for 4Q21 and PATMI of S$1.09bn (consensus estimate: S$1.12bn).

Maintain OVERWEIGHT.

  • We remain positive on banks. Bank dividend yields are attractive with upside surprise due to excess capital ratios. Improving economic conditions and rising interest rates remain tailwinds for the banking sector. SGX (SGX:S68) is another beneficiary of higher interest rates.





Glenn Thum Phillip Securities Research | https://www.stocksbnb.com/ 2022-02-09
SGX Stock Analyst Report ACCUMULATE MAINTAIN ACCUMULATE 35.900 SAME 35.900
BUY MAINTAIN BUY 14.220 SAME 14.220
ACCUMULATE MAINTAIN ACCUMULATE 31.300 SAME 31.300



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