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 2019 earnings - Guidance one to watch

Company Earnings Report Date
DBS Thu, 13 Feb 2020 (Before market)
OCBC Fri, 21 Feb 2020 (Before market)
UOB Fri, 21 Feb 2020 (Before market)

The trio of Singapore banks report their Q4 2019 and full year earnings from the coming week starting with the largest among which, DBS Group Holdings Ltd on Thursday, February 13. Broadly positive expectations had been pencilled in from a year-on-year perspective, though this was set against a weak base from the volatile Q4 2018. The outlook going into 2020 may however be more clouded with moderate economic growth expectations and the uncertain impact from the latest health scare primarily affecting China and the regional market sentiment.

Q3 Revenue (billion) 3.823 2.655 2.609
Q4 Revenue estimate (billion) 3.616
(+11.5% YoY)
(+11.9% YoY)
(+14.3% YoY)
Q3 EPS Adj. 0.637 0.264 0.670
Q4 EPS Adj. estimate 0.570
(+10.7% YoY)
(+33.6% YoY)
(+10.9% YoY)
Q3 Net income (billion) 1.629 1.172 1.118
Q4 Net income estimate (billion) 1.503
(+14.0% YoY)
(+24.4% YoY)

(+10.5% YoY)

Source: Refinitiv

Weaker NIMs and loan growth

Q4 2019 had been another quarter of mixed market moves for the local STI and the trio of local banks that takes up the lion’s share on the index. The guessing game surrounding the US-China phase one trade deal had continued into the end of the year before seeing it finally being inked in early 2020.

Source: Refinitiv, IG

For banks’ key component of interest income, this had perhaps had a mixed impact. On one hand, against the backdrop of the uncertain trade climate, economic performance deterioration for the Asia region had weighed on business and market confidence leading to subdued loan growth. Average loan growth in Q4 was seen remaining in low single-digit growth at 2.9%. On the other hand, this weakness had invited central bankers to act early in support of the economy with the Federal Reserve cutting rates for the third and last time for 2019 in October. Alongside the Fed, various Asia central banks had also correspondingly eased monetary policy seeing to stabilisation of economic conditions into the yearend. This however serves as a double-edged sword with net interest margin – which is the difference between the interest income and the amount paid out to lenders – being squeezed as well. Singapore’s 3-month SIBOR had declined from around 1.88% in September to around 1.77% in December with Fed funds rate.

That said, the above may not come as a surprise with guidance from banks’ management having pre-empted this expectation of lowered net interest margins. DBS, which is the first to report, had placed this expected decline at around 7 basis points for the whole of 2020 in their Q3 2019 results presentation, having also alluded to the expectation of low-single digit growth, which may be the new normal from here. The good news may also be the limited likelihood of the Fed further lowering interest rates in the 2020 election year.

Broadly on non-interest income, fees are expected to come in with the seasonal Q4 weakness while little expectations are present for significant asset deterioration despite the risk off mood that had plagued markets for a good portion of the quarter.

Guidance from management will be key

Moving forward, guidance may once again be key here as the market grapple with the uncertain impact from the 2019-nCov situation or better known as the coronavirus. As the headlines have suggested, the coronavirus had thus far claimed more lives than the 2003 SARS virus as of early-February, saw to cities undergoing lockdown and disrupted air travel from the biggest tourism market to many parts of the world including Singapore.

The current duration in which the coronavirus had affected the Chinese economy and the region may be regarded as slight at present, but it will no longer be immaterial if the magnitude and duration of the impact continue to increase exponentially. The fortunate development had been the quick response from authorities, but for bank earnings that are intertwined with the macroeconomic environment, the outlook will be key.

The local Straits Times Index had taken a beating in the immediate week after concerns erupted, falling 2.7% in the week after the Chinese New Year holidays. The issue may remain a key factor guiding the broad market sentiment alongside earnings performance in week, but any provision of a softer guidance could bring about further pressure for prices.

Source: Refinitiv

DBS Group Holdings

As the first to release their bank earnings, the perception towards DBS’ results would likely ripple across prices for the trio of banks. Watch the performance against consensus and guidance here for any disappointments that could see prices break out from the current rangebound trade. As highlighted above, a good portion of the attention may be falling squarely on guidance. Any added concerns paid towards the impact of on-going issues such as US-China trade or the coronavirus could also see to diverging fortunes with UOB having a relatively smaller Greater China exposure compared to peers.

Over and above DBS’ performance, any disappointments in the other two may also find substitution effect that could see to changes in prices, one to watch over the earnings season. Changes in risk sentiment surrounding the coronavirus developments and data updates would also play a part.

Source: IG Charts


Market Capitalisation: 65.79 billion

Development Bank of Singapore (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


Market Capitalisation: 48.89 billion

Registered in 1932, Oversea-Chinese Banking Corporation Limited (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


Market Capitalisation: 44.14 billion

United Overseas Bank (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

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