SINGAPORE (Nov 8): Singapore banks could see better days after the US Federal Reserve announces its rate hike later this year, according to RHB Research which is maintaining its “neutral” rating on the sector. As RHB analyst Leng Seng Choon explains it, local banks saw a narrowing of net interest margins in 3Q16 due to the low interest rate environment. A rate hike would logically lead to a “firmer Singapore Interbank Offered Rate and widening of local banks’ NIMs”. As such, RHB has a “buy” for DBS only, as it would be the biggest beneficiary of a rate hike. Meanwhile, banks have had to increase their provisions, after collateral values of oil and gas assets fell sharply.

Source: The Edge Markets November 08, 2016 08:41 UTC