DBS, OCBC and UOB should review dividend policies amid the deteriorating business outlook
Even if their asset quality hold up, the banks could be adversely affected by weak loan growth and a sharper than expected contraction in their NIMs
[SINGAPORE] It probably will not surprise anyone that DBS, OCBC and UOB ended Tuesday (May 13) significantly higher – with gains of 1.19 per cent, 0.74 per cent and 1.55 per cent, respectively – after the US and China agreed over the long weekend to temporarily slash the crippling tariffs they had slapped on each other.
The three Singapore banks operate businesses that are sensitive to the overall health of the region’s economies, and they are among the largest and most liquid counters in the local market. This made them natural outperformers versus the Straits Times Index (STI), which closed 0.13 per cent higher on Tuesday.
Negative territory
Yet, just before the US and China called the truce, all three banks were not only trailing the STI but also in negative territory on a year-to-date basis. DBS was down 0.02 per cent, OCBC had slipped 2.76 per cent, and UOB had fallen 4.13 per cent. The STI was up 2.34 per cent.
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