Are Singapore Bank Stocks Still a Buy?

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With so much bad news flowing in, are local banks stocks still worth owning? YahooFinance

Banks, being the pillar of the economy, have also suffered in tandem.

Long known for their ability to pay consistent dividends, a surprise announcement by the Monetary Authority of Singapore has called on the banks to cap their dividend payments this year to just 60% of what was paid out last year.Sharp margin contractionA common theme among the three banks is how their NIM has contracted sharply compared to the same period a year ago.

All the banks cited a declining interest rate environment as a key factor for their net interest income fall. The silver lining here is that thus far, non-performing loan ratios have remained fairly benign, hovering between 1.5% to 1.6% for all three banks. DBS lowered its quarterly dividend to S$0.18 from S$0.30 a year ago, UOB cut its half-year dividend to S$0.39 from S$0.55, while OCBC reduced its dividend to S$0.159 from S$0.25.

As it stands, DBS and OCBC offer a forward dividend yield of 3.4% and 3.6%, respectively, while UOB’s dividend yield is the highest at 4%.

 

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