Bryan Camoens: S’pore banks exceed 2Q09 expectations

If this banking crisis is as bad as it gets, then Singapore’s banks can afford to pat themselves on the back.

The latest set of results show that, unlike banks in the US and UK, Singapore’s banks have managed to avoid much of the bad lending that has plagued the international banking system.

Singapore’s three banks, UOB, DBS as well as OCBC have posted better than expected rather results that were significantly higher than analyst predictions and with the somewhat good news of the financial institutions second quarter results, there is hope that this better than expected quarter could possibly spell the end of this drearily depressing recession. But why did the banks perform so well?

At UOB, second quarter earnings of $470 million were down 22 per cent compared to last year but up 15per cent from the previous quarter.

Non performing loans picked up from 1.4per cent to 2.5 per cent, but the bank appeared to be very conservative in its loan book, only growing by 0.4 per cent.

Lower provisions & net interest income
Next up, OCBC, the bank posted a net profit of $466 million, up 26 per cent compared to the first quarter of this year which was ahead of the expectations of DBS Vickers Securities research teams’ expectations due to lower provisions and higher non-interest income.

The research team from DBS Vickers also noted that 2Q09 specific provisions fell 50 per cent compared to the previous quarter and that despite non-performing loans ratio rising to 2.1per cent led by the manufacturing and general commerce segments, loans contracted 2per cent q-o-q due to corporate loan repayments.

Last but not least, DBS Bank, can finally report good news in the form of a second quarter net earnings of a whopping $552 million down 15 per cent compared to 2008 but up by more 27 per cent compared to the first three months of this year.

Now according to OCBC’s investment research team the best performers were its stockbroking, investment-related, wealth management and fund management units who all performed better than initially expected.

Which could be the reason DBS Chairman Koh Boon Hwee and his management team may seem happier than a banker at a free flow happy hour at Penny Black after the recent results announcements.