UOB will suffer biggest earnings decline among Singapore banks

OCBC's second, DBS third, says Maybank.

According to Maybank's forecast ahead of the 3Q12 results season, UOB's non-interest income will come in weaker after two particularly strong quarters, and lead to a 7% qoq decline in 3Q earnings compared to a relatively stronger -4% for OCBC and -2% for DBS.

Here's more from Maybank Kim Eng:

Reporting starts. DBS kicks off the 3Q12 season with its results release on 1st Nov. This will be followed by UOB and OCBC on 7th Nov and 9th Nov respectively. Our current forecasts assume an aggregate 4% QoQ dip in 3Q12 earnings, but YoY growth would still be a decent 16%. This would lift aggregate 9M12 growth to 16% YoY as well. We expect NIMs to compress domestically on higher funding costs, while regionally, OCBC and UOB could see NIM pressure in Malaysia. We think UOB’s non-interest income may come in weaker in 3Q after two particularly strong quarters, and thus expect a larger 7% QoQ decline in 3Q earnings vs -2% QoQ for DBS and -4% for OCBC.

Challenging. Latest economic data point to a sluggish economy buffeted by exogenous factors, with the IPI in Sep contracting YoY & MoM for the second consecutive month. On the operating front, persistently low interest rates will likely cap any improvement in NIMs while loan growth domestically is likely to continue slipping, particularly as the impact from recent mortgage rulings begins to filter through.