Shares of Singapore’s two largest banks, DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp., are up in morning trade after results showed on-quarter growth in the first three months of the year.
DBS had earlier reported that first-quarter net profit fell 10% from a year earlier due to weak market sentiment but rose 30% from the fourth quarter of 2021. Net interest income climbed 4% quarter over quarter to $2.19 billion Singapore dollars (US$1.58 billion).
Of the three major Singapore banks to report earnings on Friday, only DBS managed to grow fees sequentially, Jefferies analysts said in a research note.
“DBS outperformed on non-interest income,” Jefferies said, adding that the guidance “on loan growth and fees needs a watch.”
OCBC’s first-quarter profit also fell 10% on the year, but rose 39% from the fourth quarter to S$1.36 billion.
The bank’s “good result should help stem recent price weakness,” Citi analysts said in a research note. Citi has a S$14.00 target price on OCBC’s stock.
Bucking the trend, United Overseas Bank Ltd.’s first-quarter net profit fell both from the previous year and the previous quarter. The stock fell as much as 3.1% to S$29.20 in early trading Friday.
Still, there is cause to be somewhat upbeat toward the Singapore banking sector in general, IG analysts said in a note.
“There are some pockets of optimism, where net interest income remains relatively resilient,” IG market analyst Yeap Jun Rong said. “Ahead, economic reopening and easing travel borders may drive pent-up spending on credit/debit cards and improve economic activities across the region.”
The interest-rate outlook could also boost revenues as countries look to start tightening monetary policy.
DBS Chief Executive Piyush Gupta said he expects the bank’s overall loans to grow between 1%-2% in the second quarter, with overall earnings seeing an upside due to faster pace of interest-rate increases.