The Positives
+ Fee income continues to grow. Fees grew 5% YoY, largely due to higher loan-related fees of S$244mn (+3% YoY) and a pickup in wealth management fees to S$164mn (+6% YoY) due to a return in investor confidence. Notably, wealth management assets under management (AUM) grew 11% YoY to S$179bn. Credit card fees continued to grow, reaching S$90bn in 1Q24 (+11% YoY) but normalized from last quarter’s seasonal high (-28% QoQ). Fee income makes up 16% of total income (1Q23: 16%).
+ Trading and investment income rose 10% YoY. The growth was led by customer-related treasury income hitting a record level of S$219mn (+8% YoY) from increased retail bond sales and strong hedging demands, while trading and liquidity management activities continued to perform well (+11% YoY). Customer-related treasury income makes up 42% of trading and investment income (1Q23: 43%). Other non-interest income was up 3% YoY and 33% QoQ.
+ Credit costs and new NPAs dip YoY. Credit costs dipped 2bps YoY to 23bps as total allowances fell slightly by 3% YoY, mainly from a decline in SPs (-4% YoY) on lower NPL formation, while GPs remained stable. New NPA formation fell by 17% YoY to S$249mn as asset quality stabilised during the quarter. NPL ratio improved by 10bps YoY and remained stable QoQ at 1.5%. Asset quality remained resilient, with SP/NPA stable at 32%. 1Q24 NPA coverage is at 99%, and unsecured NPA coverage is at 204%.
The Negative
– NII declines YoY as NIMs soften. NII dipped 2% YoY from NIM falling 12bps YoY to 2.02% mainly due to loan margin compression due to competition for high-quality credits and high cost of funding as the impact from the recent deposit repricing has yet to be felt. Nonetheless, interbank and securities margin remained stable at 1.11% from active management of excess liquidity. Loans grew slightly by 2% YoY, driven by selective good credits and short-term trade loans.
Source: Phillip Capital Research - 9 May 2024
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Created by traderhub8 | Jun 12, 2024
Created by traderhub8 | Jun 03, 2024