This week, United Overseas Bank (SGX:U11
) Ltd. and Standard Chartered Plc should report sequentially flat-to-lower margins as deposit repricing catches up with loan repricing, with financial markets absorbing the full extent of rate hikes. Property loans probably soured for China Construction Bank as the debt crisis deepened for builders like Country Garden Holdings Co. Analysts have attributed a sharp sequential decline in net interest margin at ICICI Bank Ltd. and Kotak Mahindra Bank Ltd. to one-offs and said the fall in margins would be more gradual going forward.
Lending margins will be in focus this week when Asia’s largest banks report earnings, amid peaking interest rates chipping away at margins. Chinese lenders are also grappling with soured loans from the troubled real estate sector.
Asian banks have so far avoided negative earnings surprises — the report card from India’s HDFC Bank Ltd., the world’s sixth largest lender, was received positively. Meanwhile, investment banking and trading challenges have been a drag on the overall performance of Wall Street giants Goldman Sachs Group Inc. and Morgan Stanley, and the global markets segment of Japan’s Nomura Holdings (SGX:N33) Inc. may have faced similar headwinds.
