The three local banks have had an amazing 2012, with net profits jumping 40 per cent to $10.6 billion from $7.6 billion helped by one‐off  gains. But excluding one‐offs, core banking business still performed pretty well boosted by bouyant bond markets amid record low interest rates and strong credit demand from robust
regional economies.

And although loans growth slowed to single digit from 2011's almost 30 per cent and interest margins fell faster than expected, asset quality remained healthy which helped contribute to the banks' double‐digit earnings growth.

DBS Group Holdings' total loan book grew 8 per cent to more than $210 billion last year. Growth was broad‐based, led by corporate loans in Singapore and the region and consumer loans.Housing loans
rose 10.4 per cent to $45.6 billion.

DBS's 2012 net profit including a divestment gain hit a record $3.81 billion, up 26 per cent from 2011's $3.04 billion. The one‐time gain of $450million was recorded for the partial divestment of a stake in the Bank of Philippine Islands.

At OCBC Bank, net profit surged to $3.99 billion, an increase of 73 per cent from $2.31 billion in 2011, helped by a $1.2 billion divestment gain. Excluding the divestment gains  ‐ which came from the sale of its stakes in Fraser and Neave Ltd and Asia Pacific Breweries Ltd last August  ‐  core net profit grew 24 per cent to a record $2.83 billion.

United Overseas Bank (UOB) posted record net profit, up 20.5 per cent to $2.8 billion. Releasing its Q4 and full year 2012 results yesterday, the bank said its robust results were underpinned by a strong customer franchise and a strategy which focused on cross‐selling to capture intra‐regional opportunities.

A repeat performance in 2013 will be tough. Bank chiefs have warned of a continued slide in lending margins. Home loans volume will also be hit by cooling property measures. Mortgages are the
banks'single largest lending product.

Source: AmFraser