, Singapore
612 views
Photo from HSBC website.

DBS and OCBC expected to deliver steady Q1 net profits

Their net interest margins will ease as a result of their Hong Kong loans.

Singapore’s DBS and OCBC are expected to deliver steady net profits in Q1, although lower than the same quarter in 2023, reports UOB Kay Hian.

UOBKH analyst Jonathan Koh expects DBS’ net profit to come at $2.49b in Q1– 10% higher than in Q4 2023, but 3% lower than last year.

Singapore’s biggest bank by assets will report a mild pick-up in loan growth in Q1, with a marginal 0.8% growth compared to Q1 2023. 

“Industry statistics saw corporate loans expand 1.6% month-on-month in February 2024, which suggest that weakness in corporate loans and repayments by customers have eased,” Koh said in a report.

ALSO READ: Singapore banks’ interest rates will remain elevated until Q3: analyst

However, DBS’ net interest margin (NIM) will ease 4 basis points (bp) to 2.09%, dragged down by lower margins from its Hong Kong dollar-denominated loans, which account for 11% of its total loans. This is a result of the Hong Kong Interbank Offered Rate (HIBOR) decreasing 43 basis points (bp) to 4.72% in Q1.

Contribution from wealth management is expected to rise 10% from a year ago to $400m, a result of “initial euphoria over potential rate cuts earlier during the quarter,” Koh said.

Bad loans are expected to remain “benign” during the quarter, with DBS likely to set aside total provisions of $213m and incur credit cost of 20bp in Q1.

OCBC is expected to tread the same path: net profit will rebound compared to Q4 2023 but will be lower than a year ago.

OCBC’s net profit is expected to rise 12% quarter-on-quarter (QoQ) but drop 3% year-on-year (YoY) to $1.82b for Q1.

However, unlike DBS, OCBC is expected to report muted loan growth with a marginal 1.4% YoY rise. This is a result of some companies deleveraging, in response to the higher interest rates, Koh said.

ALSO READ: Why tokenization and funding are two key issues for financial disruptors in 2024

OCBC’s NIM will also ease 6bp to 2.23%. Hong Kong dollar-denominated loans account for 13% of its total loans. 

Net interest income will grow 4% to Q1, whilst fee income will rise 7% YoY to S$487m.

OCBC’s NPL ratio will remain stable at 1%, factoring in an expected 22bp credit cost in Q1.

Follow the links for more news on

Join Asian Banking & Finance community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!