Wealth business seen boosting earnings prospects for Singaporean banks

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Singaporean banks are likely to see strong revenue from wealth business bolstering their profits this year, with improving economic prospects also expected to cushion the impact on their interest margins hovering near record lows, analysts say.

FILE PHOTO: An aerial view shows commercial and residential buildings in central Singapore, June 22, 2019. REUTERS/Loriene Perera

“Relative strength in wealth management should offset weakness in cards and loan-related fees for the past quarter,” said Krishna Guha, an analyst at Jefferies, referring to the Singaporean lenders. The banks’ net interest margins are expected to remain near record lows or dip slightly to between 1.5% to 1.54% in the fourth quarter, according to Refinitiv data, as demand for loans from corporates remained sluggish due to the pandemic.

“As it stands, banks have been relying on wealth and treasury segments to offset net interest income reduction,” CIMB said.

 

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