Stellar DBS at risk if Fed delays interest rate hike

Expectations are running high for the biggest bank.

Everyone is betting on DBS to benefit from the expected interest rate hike by the US Federal Reserve. If this hike does not materialize, however, Singapore’s largest bank is also likely to bear the brunt of investors’ disappointment.

According to CIMB, DBS’s share price has alread re-rated on expectations of meaningful NIM expansion with the recent hike in SIBOR and SOR.

“Should the Fed delay tapering and interest rates rise slower than expected, the disappointment may be reflected in its share price. NPLs could also start to show up, especially in the oil & gas space where DBS is most exposed,” stated CIMB. 

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