SG banks' Q3 profit seen slipping up to 1.6% QoQ on lower interest rates

Lower interest rates outweighed improved investor sentiments.

Singapore banks are expected to report net profit declines of 0.5 to 1.6% quarter on quarter during the third quarter of the year, according to estimates by CGS International.

The investment house said it is due to lower interest rates outweighing improved investor sentiments.

“We expect DBS to report a net profit of $2.80b, down 0.6% QoQ, with a net interest margin (NIM) of 1.95% (-10bp QoQ),” said CGS International analyst Tay Wee Kuang.

Meanwhile, Kuang forecasts OCBC to report a 0.5% QoQ decrease in net profit to $1.81b, and a NIM decline of 3 basis points to 1.85%.

Moreover, UOB also reported a net profit decline of $1.32b (-1.6% QoQ) during the quarter and a NIM 4bp drop to 1.80%.

“However, improved US trade negotiations boosted macroeconomic conditions and investor confidence, which we believe led to strong QoQ growth in non-interest income (non-II) for Singapore banks in Q3,” Kuang noted.

The analyst said non-II, such as wealth management fees and trading income, grew year on year across the three banks.