Singapore banks' aggregate operating income to slow to 5% in 2016

But core net profit can grow 7%.

According to RHB Research, Singapore’s three listed banks are facing the challenge of moderating topline growth. Aggregate operating income is projected to slow to 5% in 2016 after moderating to 8% in 2015 (2014: +12% YoY).

"Still, we believe sector core net profit can grow 7% in 2016 (2015: +7.5%) on well-controlled opex and manageable credit costs."

Here's more from RHB Research:

Loan demand soft but net interest margins (NIMs) stable. We forecast for moderate loan growth (constant currency terms) of 4.5% in 2016 vs 3.4% in 2015 and 14% in 2014. Domestic loan demand is soft, reflecting Singapore’s low GDP growth, while the regional lending business is being dampened by China’s slowdown and its knock-on effect on ASEAN economies.

Supporting net interest income would be stable NIMs. Although we see NIM pressures from China and ASEAN, this would be cushioned by a measured rise in Singapore’s short-term rates, along with the slow and gradual normalisation of US rates from December.

Non-interest income volatile. We do not expect a repeat of the hefty trading gains seen in 9M15 in 2016. Fee income is also expected to be tempered by lower income from loan-related activities and investment banking fees.