Singapore banks' ROEs to stay depressed at 8-9%

NIMs are expected to remain muted with only a 1-2bp pickup.

The banks are due to report their 1Q17 earnings in the next 1-2 weeks, and Maybank Kim Eng analysts expect core ROEs to stay depressed (8-9%), as NIMs could see only a 1-2bp pickup amidst flat SIBOR/SOR despite a 25bp Fed rate hike.

"We expect effects from the oil & gas saga to spill over into 1H17 – provisions could remain high with Ezra and ECS filing for Chapter 11, and as collateral values of vessels continue to be written down. Higher fees and a better trading quarter could be the key positives to look out for," the analysts added.