It will be a key earnings driver for the rest of 2017.
Domestic loans growth remains modest (annualised 7M17: 3.1%) and the positive NIM expansion trend in 1Q17 is normalising downwards sequentially (-2bp qoq in 2Q17 vs +5bp yoy from 2Q16 to 2Q17).
UOB Kay Hian's 2017 pre-provision operating growth forecast of 8% will be underpinned by the expectations of a sharp reversal in non-interest income fortunes in 2017 from stronger investment banking and lumpy corporate loans disbursement fee income.
"Note that despite a relatively strong capital market performance, 1HFY17 sector non-interest income growth despi was rather uninspiring with a 2.5% yoy growth vs our full-year estimate of 8.6% growth," the firm added.
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