Sluggish loan growth, HK slowdown threatens DBS, OCBC

Loan exposure to China could also widen.

DBS and OCBC’s asset qualities are under the threat of slow loan growth for 3Q 2019, Hong Kong’s economic slowdown, and the risk of having a larger percentage loan exposure to China, according to RHB Research.

The report also expects 3Q net interest margins (NIMs) to narrow due to the weakening of the Singapore Interbank Offered Rate (SIBOR) in the recent months, and corporate loan yields being pressured given the competition for higher-quality loans.

Mortgage numbers also weakened in 3Q, reflecting the soft home mortgage disbursements in July and August. On the other hand, business lending remains stable, with the three banks possibly recording mild 3Q sequential overall loan growth.

Non-interest income should be secure whilst loan-related fees are moderate, the report said.

Photo courtesy of Wikimedia Commons.

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