The US Fed has been hiking rates strongly for the latter half of 2022 to combat inflation. The market is seeing a peak policy rate of around 5% in the middle of next year, and the rate is likely to then dip to 4.5% by end of 2023.
CGS-CIMB’s Andrea Choong and Lim Siew Khee have downgraded their sector call on Singapore banks to “neutral” from “overweight”, as they see limited earnings growth in the coming FY2023 with the pace of rate hikes slowing.
Nonetheless, the analysts believe that with banks dishing dividends at yields of between 4 to 5%, the sector is well supported.
