Fees lift Singapore banks’ Q2 profits

But their Q2 profits are likely to be lower compared to Q1, analysts said.

Singaporean banks’ profits are expected to continue being lifted by their fee incomes, but with Q2 profits lower than the previous quarter, analysts said.

DBS is expected to report a 19% growth in wealth management fees for the Q2 period, reports UOB Kay Hian analyst Jonathan Koh. The bank’s card fees are also expected to have grown by 31% thanks to the Citi Taiwan acquisition and recovery of business and leisure travel.

DBS is expected to see its net profits rebound 2% year-on-year (YoY) but drop 9% compared to Q1.

OCBC’s fee income, meanwhile, is expected to rise by 16% compared to Q2 2023, with wealth management fees likely growing 27% during the period.

The bank’s loans and trade related fees are expected to increase 5% to $124m, according to Koh.

Overall, OCBC is expected to see its net profit grow by 7% YoY but drop 8% compared to Q1.

UOB, meanwhile, is likeliest to deliver better net interest margin (NIM) improvement compared to its banking peers in Q2, according to a separate report by DBS Group Research.

UOB is expected to achieve better NIM improvement in Q2, higher than the previous guidance of 1-2 basis points (bp), as it continues to actively manage its deposit costs, noted Rui Wen Lim, analyst for DBS Group Research.

In contrast, other banks faced declining HIBOR rates and reduced NIM sensitivity in Q2, Lim said.

“We also expect UOB to see stronger loan growth compared to peers, whilst sector loans declined by c.1% from end-March to end-May,” Lim said.

UOB is also expected to log lower earnings in Q2 compared to Q1, on higher expenses.

Costs relating to UOB’s Citi acquisition should taper off in the second half of 2024, which should provide a buffer to its earnings, Lim said.