This analyst isn’t buying the banks' results. Should you?

SINGAPORE (Nov 7): Maybank Kim Eng is maintaining its “negative” recommendation on Singapore banks, in anticipation of further asset quality deterioration, even as the local lenders have focused on revenue generation in 3QFY16.

Ng Li Hiang, Maybank Kim Eng’s analyst, noted that the three lenders had grown market share in domestic loans and sought out new sources of loan growth during the quarter amid falling customer spreads, while higher non-interest income and cost management arrested declining earnings.

DBS Group and Oversea-Chinese Banking Corporation posted a respective 24% and 25% increase in non-interest income, driven by wealth management fees and net trading income, which helped to mitigate the higher provisions and poor performance in its net interest income. United Overseas Bank’s non-interest income fell 5% from the gain on divestment of investment securities in 3QFY15.

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