Singapore banks' non-interest income growing 7-8% annually since 2014

Non-interest income now constitutes about 40% of revenue.

According to Jefferies, Singapore's three biggest banks have grown non-interest income by 18% for 1Q17.

"Whilst some normalisation is due, it is commendable that over the last three years, fees are growing annually at about 7%-8%. Non-interest income now constitutes about 40% of revenue which means a high-single digit growth should result in about 4-5ppt of revenue growth in a capital efficient manner and diversify revenue."

Here's more from Jefferies:

Loan growth for the three banks bottomed by the first quarter of 2016 and has picked up pace since then. In 1Q17, the banks grew loan book by about 9%. However, margins are still contracting on YoY basis.

Management is guiding for margins to expand with a lag as SGD money market rates play catch up with Fed Funds rate. Average expectation is for 2-3 rate hikes for the rest of 2017 and SGD-USD rate correlation ranging from 40%-70%.

Every 50 bps increase in SGD interbank rate is estimated to increase net income by 4%-9%, with DBS being most sensitive. Our margin forecasts are broadly flat for FY17. We hope that margins will reflate as the excess liquidity dissipates without causing any collateral damage.