Less stellar Q3 seen for DBS, UOB

Slower loan growth among reasons cited by analystsAHEAD of the release of third-quarter financial results, analysts are expecting the earnings of DBS Group Holdings and United Overseas Bank (UOB) to have moderated from a stellar second quarter on slower loan growth, softer capital market and weak wealth management fees.儲存For Oversea-Chinese Banking Corporation (OCBC), its July-September performance, on a quarter-on-quarter basis, is expected to receive a boost from the absence of unrealised mark- to-market losses from its Great Eastern insurance unit, BNP Paribas analyst Frank Yuen wrote in a note.DBS, OCBC and UOB are expected to post net profits of $839 million, $648 million and $703 million respectively for the quarter ended September, surveys done by Bloomberg show.This is compared to Q2 net profits of $887 million, $597 million and $783 million respectively. In the year-ago period, net earnings came in at $856 million, $724 million and $707 million respectively. Factoring in a $1.13 billion divestment gain, OCBC's recorded net profit was $1.85 billion in Q3 last year.The banks' loans growth will soften in Q3 from a high base during the first half of the year, led by a slowdown in general commerce loans, Mr Yuen said. "Slower loan growth may drag down credit-related fee income."Q2 loans grew around 14-15 per cent year-on- year amid economic slowdowns in Singapore, Greater China, India, Malaysia, Indonesia and Thailand. DBS chief executive Piyush Gupta said during the bank's Q2 briefing that the branches are "selling all kinds of loans".Analysts are expecting Q3 loan growth to slow to 1-2 per cent from the preceding quarter, given weakening mortgages and corporate loans.On a year-on-year basis, loans are projected to grow 17.2 per cent for DBS, 14 per cent for OCBC and 14.5 per cent for UOB, Jefferies Singapore analyst Krishna Guha said."While some street commentary may have bordered on sharp slowdown due t迷你倉 mortgages and Asean/China exposure, we do not think it will materialise this quarter," Mr Guha said. "Drawdown from previously approved loans will keep growth at double digits at least till 1Q14."The banks' non-interest income is likely to be impacted due to the softer capital market and weak wealth management fees, given the uncertainty in the investment environment.DBS should see Q3 non- interest income fall 12 per cent on a quarter-on-quarter basis; OCBC's non-interest income could grow 3 per cent as the impact of weak wealth management revenue will be somewhat mitigated by insurance gains on the back of rising bond yields, Mr Guha said.In the third quarter, UOB would be saved by one-off gains of about $50 million from the sale of its stake in Pan Pacific Hotels, lifting its non-interest income and alleviating its overall weaker market-related non-interest income trend, according to DBS Vickers analyst Lim Sue Lin.UOB also booked gains from the sale of investments held by an associate in Q2 and guided that there will be some spillover in Q3, albeit in a smaller quantum. "Collectively, these two items should keep earnings afloat," Ms Lim said.Another theme for Q3 is the stabilisation of margins. The banks managed to hold their net interest margins (NIM) steady in Q2 from the previous quarter and their bosses predicted no further falls for the remaining quarters, barring movements of one or two points.Analysts expect NIM for all three banks to remain stable, but with possible headwinds ahead. "It remains to be seen whether the banks can get margin uplift from a previously anticipated shift from bonds to loans," Mr Guha said.Contributions from the banks' Indonesian operations will likely moderate mainly due to currency weakness. The rupiah depreciated about 17 per cent against the Sing dollar during the quarter.DBS and OCBC will announce their Q3 results on Nov 1, while UOB will release its results on Nov 5.儲存倉