Slowdown looms for Singapore banks

Macquarie says rosy trading income numbers in 1Q12 are not likely to repeat throughout the year.

Here’s more from Macquarie Equities Research:

1Q12 is a tough act to follow. We raise our full-year estimates following the strong 1Q12 results. But we would caution against simply multiplying those results by four to infer full-year expectations, as the rosy trading income numbers in 1Q12 are not likely to repeat throughout the year. More fundamentally, we believe that demand for regional trade finance is slowing and spreads on this business are also falling in 2Q12.

2Q12 earnings momentum to weaken. DBU loan growth figures are still running at 24% YoY but are less impressive sequentially at just 4% YTD through April. Along with the volume slowdown, the modest uptick in NIMs seen in 1Q will likely flatten in 2Q. The banks’ investment-related income is also likely to taper off in 2Q12. We thus assume an 18% QoQ decline in earnings off the very high 1Q12 base.

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