By Faris Mokhtar
(Bloomberg) – DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp. shares rose as the lenders reported better-than-expected earnings, with United Overseas Bank Ltd. falling as it missed forecasts.
DBS’ shares rose as much as 4.3% and OCBC was up as much as 3.7% at the market open, outpacing the gain in the benchmark Straits Times Index. UOB’s shares fell as much as 3.1%.
First quarter profit at the three Singapore banks all dropped about 10%, amid market volatility and ongoing concerns over inflation and supply disruptions.
“We believe Singapore banks’ asset quality may stay resilient as regional reopening gathers pace,” said Bloomberg Intelligence analyst Rena Kwok. “These lenders’ management overlay of general provisions could offset possible slippages should macroeconomic headwinds stiffen.”
The banks’ results come as global lenders grapple with fallouts from the Russia-Ukraine war and market swings linked to U.S. monetary policy tightening. Slower growth, higher inflation and supply chain disruptions are key risks to watch amid lingering uncertainty over the pandemic, DBS’ Chief Executive Officer Piyush Gupta said in a statement on Friday.
“Geopolitical developments in recent weeks have created macroeconomic headwinds and financial market volatility,” Gupta said.
DBS’ portfolio remains resilient as stress tests of vulnerable sectors and countries reveal no imminent areas of concern, according to Gupta. There’s also no material impact from China’s lockdown, he added.
UOB’s CEO Wee Ee Cheong said that current disruptions to global supply chains will shore up the importance of Southeast Asia, and the bank remains optimistic of the recovery and longer-term potential of the region.
Rate Hikes, Reopening
DBS said it expects to benefit “significantly” from interest rate increases in the coming quarters. OCBC and UOB were upbeat about the reopening that’s underway in much of Southeast Asia, as countries seek to jump start their economies coming out of the pandemic.
For OCBC, which saw its results bolstered by lower allowances which fell 73% from a year ago, its CEO Helen Wong said the bank’s overall loan portfolio remains sound.
“The gradual re-opening of economies and borders in Southeast Asia will drive a further rise in economic activities and we continue to closely monitor the evolving pandemic situation in Greater China,” Wong said.
© 2022 Bloomberg L.P.