What you need to know about the SG market
#whatstrending feat. Beansprout
Ever wondered what is currently driving the local and regional markets? #whatstrending is a new series addressing some of the most trending questions/topics on the markets for investors. Designed to be educational, expect to get factual information on what is driving sectors and stocks listed on SGX, featuring insights from professionals in the community.
Today, we hear more from Beansprout, a MAS-licensed investment advisory platform offering expert insights on Singapore stocks, REITs, ETFs and bonds. Gerald Wong, founder and CEO, shares his thoughts on market developments.
Q: The results of Singapore banks are always closely watched. What are some of the key takeaways from the results?
From Gerald, founder and CEO of Beansprout:
Local banks reported stellar results for 4Q22, ending the year with strong performance. All three declared higher dividends, as their interest income grew solidly on the back of interest rate hikes.
Net interest income drove higher profits. The strong earnings for 4Q22 was driven by an increase in net interest income. Net interest margin (NIM) rose to record levels, as lending rates rose at a faster rate than funding costs.
Non-interest income, however, was negatively impacted by rising rates. All three banks reported lower non-interest income. Higher rates dulled the appeal of stocks and bonds. This hurt fee income from wealth management and investment banking, as well as trading profits.
Asset quality remains healthy. Despite concerns about slowing economic growth, the asset quality of the banks remains healthy. Non-performing loans (NPL) as % of total loans improved for DBS and OCBC in 4Q22. UOB‘s NPL rose marginally due to the integration of its newly acquired Citibank credit card business in November.
Dividends were raised. With improvements in profitability and returns, all three banks raised their dividends in FY22. Based on their share prices as of 28 February 2023, Singapore banks offer a dividend yield of between 4.5% to 5.9%.
For more insights on Singapore stocks, REITs, ETFs and bonds, visit growbeansprout.com.
