5 things that got Singapore banks worrying for the next results season

Will margins be stable?

According to Barclays, the three Singapore banks were conservative, growing deposits faster than loans q/q in 3Q13.

The unexpected delay in the QE tapering impacted margins as the banks attracted time deposits and maintained surplus liquidity, which was deployed in lower-yielding assets.

Here's more from Barclays:

However, the impacts of lower loan yields and lower loan-to-deposit ratios were partially offset by the greater reliance on wholesale funding, which the Singapore banks could access at a low cost due to their strong credit ratings. Margins were 0 to 2bps lower q/q.

The three banks' management teams guided for 1) stable margins for the next few quarters with upside medium term; 2) "high single digit to low teens" loan growth for FY14, which is slightly slower than for FY13; 3) loan/deposit ratios steady at about 90%; 4) the recent slowdown in new residential property transaction volumes post the implementation of TDSR to be reflected in 2H14 (when loans are drawn down); and 5) stable asset quality with no signs of systemic stress (except for in India for which DBS's management believes the worst is over).

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