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Singapore Banks Earnings

The three local banks, DBS, OCBC & UOB comprise the lion’s share of the Straits Times Index (STI), so it is little surprise that their earnings announcements are closely watched.

Singapore bank Q4 earnings – will they disappoint?

Singapore’s top three banks will see their Q4 earnings released mid-Feb with lukewarm results expected for the final quarter of fiscal year 2016.

Certainly, we have seen local banks rallying since November’s US elections with DBS an outperformer amongst the three. The next step forward may depend on whether earnings can hold up against the backdrop of the bullish sentiment for banks.

A lookback at the first month of 2017 finds the STI crossing the 3,000 mark, a sight not seen since 2015. The local index has been a clear outperformer in the region, clocking more than 5.76% gains in January. Domestic and external factors were both seen supporting the rally. Advance estimate for Singapore’s Q4 GDP came in higher than expected at 1.8% YoY and brought 2016 full year GDP above the government’s estimate. Meanwhile optimism in the US post-Presidential elections has also lifted global equity markets.

Specifically for banks, rising interest rates have boosted the outlook for earnings and spiked market interest. 3-month swap offer rate (SOR) briefly peaked above 1.00% before the turn of the year, up from sub-0.70% at the start of Q4. 3-month Singapore Interbank Offer Rate (SIBOR) likewise rose, likely to help banks’ net interest margin (NIM) up from the trough in Q3. However, this has always been a double-edged sword for earnings given the slow growth climate and the domestic market’s reliance upon leverage, a point which the market appear to be placing at the back of their minds thus far.

Forecasters, however, have presented a more balance view, factoring in the pressure of a higher interest rate and the lack of growth drivers. A quick scan of the earnings consensus consolidated by Bloomberg for Q4 points to a positive year-on-year growth only for DBS. Underpinning the optimism for Southeast Asia’s largest bank has been the bank’s recent acquisition of ANZ’s wealth management and retail banking business, likely to widen the bank’s stream of income. Broad earning-per-share (EPS) for all three banks is meanwhile expected to moderate at the end of the year. 





Q2 Revenue (billion)




Q4 Revenue estimate (billion)


(+4.0% YoY)


(-5.9% YoY)


(-1.6% YoY)

Q3 EPS Adj.




Q4 EPS Adj. estimate


(-0.3% YoY)


(-19.0% YoY)


(-2.4% YoY)

Q3 Net income Adj. (billion)




Q4 Net income Adj. estimate (billion)


(-2.8% YoY)


(-6.3% YoY)


(-12.4% YoY)

Source: Bloomberg


As things stand, the market consensus remain bullish on banks with 56.0% and 45.8% of the analysts polled by Bloomberg calling a ‘buy’ for DBS and OCBC. Meanwhile 69.5% of analysts are recommending a ‘buy’ or ‘hold’ call on UOB, the majority picking the latter. Certainly with two to three hikes likely to be seen this year, a significant acceleration from the pace of hikes in 2015 and 2016, the market is rightly optimistic on future NIM. The flipside of the coin would likely be with the deterioration of asset quality and the lack of market confidence amid the uncertainty in geopolitics and trade.

Taking the lion share on the local STI, the banking sector would see their earnings exert due significance on price movements in the coming weeks. It would however be important to not alienate global market developments that could either aggravate or alleviate the impact of the results.


Earnings Release: 14 Feb 2017
Market Cap: S$39.41 billion3

Registered in 1932, OCBC is the oldest bank in Singapore, after a merger of three Hokkien lenders. It counts OCBC Securities and Great Eastern Holding Ltd among its subsidiaries. The bank has a presence in 18 countries and territories, and is the second-largest financial institution in Southeast Asia (SEA) by assets.

Live OCBC prices


Earnings Release: 17 Feb 2017
Market Cap: S$33.7 billion3

UOB was set up in 1935 and is now the third-largest bank by assets in Southeast Asia. Having started out as United Chinese Bank, UOB was renamed in 1965 and it now has over 500 offices across 19 countries and territories. The bank is increasing its yuan business, with the asset management arm securing a RQFII licence in June 2015.

Live UOB prices


Earnings Release: 16 Feb 2017
Market Cap: S$47.5 billion3

DBS is the largest bank in Singapore by assets and was initially established by the Singapore government to assume industrial financing activities. DBS acquired the Asian private banking business of Societe Generale in 2014, and was the only ASEAN bank to be ranked among the world's top 50 private banking brands in 2015.

Live DBS prices

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1 Based on revenue excluding FX (published financial statements, October 2016).

2 Awarded the best forex provider in Singapore by the Global Brands Magazine in 2016

3 Source: Bloomberg (2 February 2017)

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