Prospects for consumer banking business dim
Institutional banking business meanwhile is seen to thrive amidst chaos.
According to CIMB , pertinent issues for Singapore banks would be more akin to 2011, rather than 4Q08. Issues that will have ramifications for earnings, it said, include: 1) dollar liquidity; 2) falling asset prices; and 3) the lack of loan growth as a driver this time vs. 2011. Treasury-related earnings will naturally shrink for all banks.
Between institutional banking and consumer banking business lines, CIMB said that that the prospects for institutional banking will be brighter as corporate margins widen, intra-Asian trade takes off, and Asian M&A deals rack up.
"As European banks retreat from Asia once again, pricing for corporate spreads is likely to inch up and stay there. Thin spreads for consumer mortgage are unlikely to change much. The dependence on wealth management to fire up profitability for the consumer business might prove equally tough as continuously volatile “risk-on, risk-off” markets weaken investment appetite," CIMB explained in a report.