Here’s what you can expect from Singapore banks: CIMB

The analyst has bleak expectations for the banks, but will their expectations hold true when DBS, OCBC, and UOB release their 3Q11 results next week?

According to CIMB, DBS and OCBC are expected to have a profit slump of 14% and 13%, respectively.

Here’s more from CIMB:

DBS: 3Q11 expectations
We expect a S$632m net profit (-14% qoq) for DBS, with earnings headwinds from lower capital-market-related income and trading. 2Q already had some MTM losses. DBS said that treasury-related gains were increasingly customer-driven and stable. 3Q would provide evidence on how much of this is true. Also, the bank previously said it would benefit from a collapse of the US$ (when the US’s credit rating was cut).

The dollar swung the other way in 3Q. Lastly, a low SOR and tighter US$ funding could conspire to bring margins down further. These are the negatives expected for 3Q. Positives are: 1) loan growth is likely to stay above peers as DBS benefitted from increased (US$) trade-financing demand in Asia, after French banks pulled out of Asian markets; and 2) talk that private-banking inflows have accelerated following the euro crisis. Expect questions on DBS’s US$ funding and its private-banking progress.

OCBC: 3Q11 expectations
We expect a S$503m net profit (-13% qoq). The key inputs are lower fund-management, wealth-management and insurance income. We also expect higher credit costs, only because they were so low previously (2Q: SP nil, GP 18bp). Bank of Singapore CEO Renato de Guzman said that his unit had been a beneficiary of the euro crisis, via stronger AUM growth; we will be curious to see how wealth-management fees are tracking AUM growth.

Fund-management trends will also be watched to ascertain any damage from the departure of ex-Lion Global CEO. The bread-and-butter lending business should be stable. OCBC had the best credit risk management during the GFC and should not sputter.

UOB: 3Q11 expectations
We expect a net profit of S$585m on 2 Nov. Loan growth is likely to stay strong, though this could be largely negated by a larger-than-peers’ margin contraction from: 1) the likely sale of AFS investment securities in 3Q, bringing down overall interest yields; 2) higher-cost longer-term funding sources raising funding costs; and 3) the possibility of UOB trying to stay competitive by adding more overseas deposit funding, since it is quite concerned about funding.

There should be some offset from higher interest yields in future quarters as all the local banks have started to raise loan pricing. UOB is also likely to have further reduced its S$1.5bn European bank debt portfolio and possibly close off a large chunk of its US$ government debt. Given its constant guidance on leveraging its ASEAN platform and network to spur transactional fee growth, we would be curious to see whether its more stable fees (loan-related, trade-related, credit cards) can hold up.

If you've been wondering whether SBR could work for your company — yes, probably.

A lot of the companies we partner with started as readers. They'd been following our coverage for a while, saw their own customers and competitors in it, and eventually asked the obvious question: could we do something with you? The answer is usually yes. The shape of it depends on what you're trying to do.

The options are broader than most people assume — thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. Some partners use one channel; most use a mix. We figure out the right combination by starting with your brief, not with our rate card.

So if the question has been on your mind, here's the easy way to ask it.

We'll tell you honestly whether we can help, and how. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia