Here in Singapore, Jonathan Koh of UOB Kay Hian has become more upbeat about banking stocks. He believes they can secure attractive yield spreads. With resilient earnings, strong capital adequacy and disciplined capital management, the banks can sustain their dividend payouts. The Singapore banking sector offers attractive value, with a low P/B of 1.65 times and a high 2026 dividend yield of 4.8%, says Koh.
A so-called “Goldilocks economy”, where steady growth is accompanied by low inflation, will help generate “sustainable” and sustained economic expansion in the US. Two rate cuts are expected by the end of June, with none in the second half of the year. In addition, the much-feared disruptions to global trade did not materialise, at least not to a significant extent. Instead, to boost affordability for US consumers and voters, tariffs on key agricultural products have been removed.
Against this backdrop, banks deliver resilient earnings, driven by growth in non-interest income, including wealth management, which offsets the negative impact of net interest margin compression.
