Here are 2 reasons why NIMs could remain subdued for Singapore banking giants

It could remain flat this year even with the lift in their valuations due to Fed rate hike.

The confidence in two to three Fed hikes in 017 has lifted the bank's valuations on expected pass through to NIMs. However, analysts from CIMB are thinking the opposite.

"Our NIM forecast is 0-3bp lower than Bloomberg consensus across the three banks for FY17-18F. We attribute this to expectations of lower 3M SIBOR/SOR, lower customer loan spreads, continued lagged repricing effect into 1H17, and impact of US Fed rate hikes to be felt only in 2H17, which could cap NIM upside. Overall, we expect relatively flat NIMs yoy in 2017 vs. the 0-3bp NIM expansion projected by consensus," CIMB said.

Expecting NIMs to remain flat this year, CIMB said customer loan yields remain under pressure from competition for high-quality lending to corporates and for mortgages.

Pointing at another possible reason, CIMB said, "Movements in the USD/SGD are the key determinant of SIBOR/SOR; market expectations of a gradual 4% appreciation of the USD/SGD in 2017 could cap upside to S$ rates despite higher Fed funds rates."