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Thursday, November 05, 2020 – 12:36 pm
SHARES in DBS, OCBC and UOB rose to multi-month highs after their third-quarter financial results beat expectations and signaled that the trio were withstanding the impact of the Covid-19 pandemic on loan quality and the economy. .
At noon on Thursday, DBS gained S $ 0.83 or 3.9% to S $ 22.38 on 6.1 million shares that changed hands, OCBC advanced S $ 0.30 or 3.5% to S $ 8.93 on 9.1 million shares traded, and UOB rose S $ 0.55 or 2.8%. cent at S $ 20.35 with 4.6 million shares traded.
The three accountants were the most traded by value on the Singapore exchange during the morning. They were among the biggest winners in the Straits Times benchmark.
In addition to the better-than-expected results, the stock price rises also came amid a widespread rally: Singapore stocks along with the rest of the region’s markets performed another strong result, with investors encouraged. From the news of the US presidential race overnight, the odds had swung in favor of Democratic challenger Joe Biden after he took Michigan and Wisconsin, swapping the two states won by incumbent Donald Trump.
DBS’s third-quarter earnings beat the S $ 1.17 billion average estimate from four analysts, according to Refinitiv data, and the S $ 1.12 billion average estimate from analysts surveyed by Bloomberg.
This was despite a 20 percent drop in net earnings to S $ 1.3 billion for the July-September period. Total revenue was down 6 percent, hurting both net income and fee income, while business income increased.
Singapore’s largest bank reported Thursday that its total appropriations more than doubled from the previous year to S $ 554 million for the quarter.
However, income increased in some companies, such as wealth. DBS CEO Piyush Gupta said in a presentation that “business momentum improved,” with wealth management and a rebound in card spending among the bright spots.
It expects a strong economic rebound in Asia, from a low base, to fuel mid-single-digit loan growth and double-digit fee income growth in 2021.
Meanwhile, OCBC posted a smaller-than-expected 12 percent drop in its net profit to S $ 1.03 billion for the third quarter, from S $ 1.17 billion a year ago, due to lower interest income. and the largest assignments weighed.
This still exceeded the average estimate of S $ 864.9 million from four analysts based on Refinitiv data, and was higher than the S $ 850 million projected by analysts surveyed by Bloomberg.
During the quarter, net income increased 40 percent due to lower allocations.
OCBC said Thursday that it does not expect a new wave of loan default requests amid the extension of specific debt holidays in Singapore, even as the lender continues to accumulate provisions to cushion bad loans.
Its chief executive, Samuel Tsien, said that OCBC is working on an extension of the assistance plan for affected customers, although this will not be done “in a generalized way” compared to the previous measures introduced in the second quarter.
Tsien was also optimistic about the bank’s wealth management business, which saw revenue rise to a record in the first nine months of 2020. OCBC is looking to expand its onshore wealth operations in Southeast Asian countries such as Malaysia, Tsien noted. .
UOB, which has considerable exposure to small and medium-sized businesses, told The Business Times that it is confident that its provisions are strong enough to withstand further accumulation of bad loans, particularly with the automatic defaults being rolled back in Singapore and Malaysia.
The bank’s net profit for the last quarter was S $ 668 million, down 40 percent from S $ 1.12 billion a year ago, due to pre-emptive accumulation of loan allocations. An additional provision of S $ 339 million was reserved for non-impaired assets to strengthen the coverage of the provision.
While third-quarter results may not demonstrate the true measure of distress, the overall impact “may not be as bad as feared,” said Lee Wai Fai, UOB’s chief financial officer.
Diksha Gera, an analyst at Bloomberg Intelligence, said the three banks overall reported “very encouraging numbers.”
Supply levels are healthy and stimulus from the Singaporean government “may help banks ride the wave,” he added.
Share price gains for the three lenders on Thursday extended their rebounds from earlier in the week, after they had fallen to lows last Friday.
On Tuesday night, the Singapore Stock Exchange (SGX) said in a market update that banks had averaged a 20.4 percent decline in total return for the first 10 months of this year.
This was very much in line with the average decline of 20.6 percent for the top quartile of banks that are listed globally by market value, SGX noted.
Meanwhile, short-term and more active investors, as well as long / short-term traders, were able to trade the relative price swings seen in the trio’s shares in October, the broker added.
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