For the Singapore banks, trade-related assets account for around 10% of their loans and only 1% to 3% of these loans are exposed to the first order impact of the increase in US tariffs, according to the analysts.
Jefferies analysts Sam Wong, Shujin Chen, Joseph Dickerson and Joanna Cheah see that the revising of tariff rates between the US and China could mean a more favourable “risk-reward” scenario for Singapore banks.
“For Singapore banks, Oversea-Chinese Banking Corporation (OCBC) missed on net interest margins (NIM) 11 basis points (bps) lower q-o-q versus largely stable peers and has the highest NIM sensitivity across currency at around 4% to 5% net interest income for every 100 bps rate cut, versus peers at 2% to 3%,” write the team at Jefferies in their May 13 report.
