Here's a rundown of Singapore banks' 3Q16 results

Better cost management offsets higher provisions due to deteriorating asset quality.

Maybank Kim Eng reports that Singapore banks are now driving topline growth, particularly non-interest income, and better cost management to compensate for higher provisions required in the face of worsening asset quality.

Aside from asset quality deterioration, 3Q16 results as a whole reflected: 1) gain market share in domestic loans or find new sources of growth; 2) lower customer spreads from lower SGD/regional rates and lack of repricing from credit spreads in a heightened risk environment; 3) higher non-interest income for DBS and OCBC; and 4) better cost management at DBS.

Here's more from Maybank Kim Eng:

DBS's and OCBC's outperformance in non-interest income, rose 24% and 25% YoY, respectively, helped to offset flat and declining growth in net interest income and higher provisions.

On the whole, large increases were in WM fees (DBS: 47% YoY, OCBC: 12% YoY) and net trading income (DBS: 18% YoY, UOB: 39% YoY). Higher life assurance profits from Great Eastern (GEH) partly resulted in a 48% YoY increase in other fees for OCBC, which was led by unrealised mark-to-market gains in GEH's equity and bond investment portfolio.

The other components that contributed to increases in OCBC's other fees were dividend income (+112% YoY) and net gain from disposal of properties (+238% YoY). UOB's non-interest income was down 5% YoY due to a gain from the sale of investment securities in 3Q15.

DBS's significant 19% YoY increase in pre-provision profit (PPoP) was also partly due to its better cost management than peers, as expenses were down 5% YoY vs peers' 1-6% increase.

DBS attributed this to its digitalization efforts that resulted in productivity gains and strategic cost management. All three banks reported higher provisions YoY (DBS: >100%, OCBC: 11%, UOB: 16%) on the back of worsening asset quality deterioration especially in the O&G sector.