Solid Results for the Three Singapore Banks, DBS Group Remains Our Preferred Pick

The three Singapore banks reported solid first-quarter results with the trends generally consistent across the three banks. As expected, the results were weaker against the same period last year, mainly due to lower net fee and commission income as capital markets were much stronger in 2021. First-quarter net profit was 30% higher for DBS Group against last quarter at SGD 1.8 billion, Oversea-Chinese Banking's, or OCBC’s, net profit was up close to 40% to SGD 1.4 billion while United Overseas Bank's, or UOB’s, result was 11% weaker at SGD 906 million. In our view, DBS’ result was relatively better than peers UOB and OCBC with the former posting higher loan growth and net interest margin improvement. Trading income was also stronger quarter on quarter. For UOB and OCBC, there were one-offs in their respective results with UOB’s noninterest income lower on mark-to-market losses while OCBC’s result benefited from lower expected credit loss of 6 basis point on total loans. The latter was due to a larger expected credit loss booked in the fourth quarter last year.