Singapore Stock Market News

Singapore Banks - The NIM Enigma

StockFanatic
Publish date: Wed, 14 Oct 2015, 12:47 PM
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Our quantitative tests of Singapore banks' NIM sensitivity to SIBOR largely validate conventional thinking that firmer rates tend to fatten NIMs.

Rising rates benefit NIMs through the repricing interval, risk premium & yield curve. In Singapore, repricing and risk premium have stronger influence. But as delinquencies accompany higher credit risks, the incremental income from NIM expansion may be attenuated by credit costs.
Cut sector rating to Underweight from Overweight. Downgrade DBS & OCBC to Sell. Downgrade UOB to Hold but our preferred exposure to the sector.
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