Singapore’s top banks could see a boost in share prices

Analysts said that Singapore’s banks are anticipated to report increased earnings as the global economy recovers from the pandemic. The Singapore’s top banks are DBS Group Holdings, United Overseas  and Oversea-Chinese  Corp.The are planning to disclose first-quarter earnings in the coming days. The largest of the trio, DBS Group Holdings, will be the first to do so on Friday, while smaller peers United Overseas and Oversea-Chinese Corp will report on May 6 and May 7.

Investors are optimistic about the banks‘ prospects, with all three stocks gaining more than 15% this year as of Friday’s close, outpacing the benchmark Straits Times Index, which rose about 12.3%.Krishna Guha, an equity analyst at investment bank Jefferies, said in a report that a better earnings outlook could send the city-state’s  stocks higher. The analyst has a buy rating on all three and lifted his price targets for them in early April.

The equity analyst also added that said growth in the loans business is picking up, while lending margins may recover. Buoyant deal-making activities in the financial markets could also boost service fees for the banks, he added.David Lum, an analyst at investment bank Daiwa Capital Markets, said he is bullish about the Singapore  but less bullish on the sector compared to many of his counterparts.

The net interest margins measure the lending profitability which would stay weak even as  earnings recover. He explained that competition in the Singapore housing loan market is one factor that could keep a lid on lending margins. The shares also look fully valued. His top pick among the three Singapore is Oversea-Chinese Corp which is rated outperform. Both DBS Group Holdings and United Overseas banks have a hold rating