SINGAPORE, Nov. 4 (Xinhua) -- Singapore's three major banks, DBS, OCBC and UOB, are expected to maintain resilient ordinary dividends despite mounting pressure on net interest margins, with loan growth, wealth management and fee income becoming increasingly important to earnings sustainability, S&P Global Market Intelligence said on Wednesday.
S&P Global Market Intelligence said in an analysis that strong capital positions at the three banks would continue to support ordinary dividend payments as the benefits of higher interest rates fade.
However, the banks will face greater scrutiny over earnings sustainability and their ability to distribute excess capital, it added.
The analysis highlighted that DBS had the strongest potential for additional capital distributions, given its transitional common equity Tier 1 (CET1) ratio of 16.6 percent.
"With the ordinary dividend well supported, the key question is the scope for continued incremental distributions from surplus capital," said S&P.
It noted that OCBC faces a greater earnings challenge as net interest income declined 3 percent in the first half, despite a 36 percent increase in non-interest income driven by wealth management, trading and insurance activities. Sustaining this momentum will be crucial as margins come under pressure.
UOB's ASEAN franchise, meanwhile, could provide a growth buffer. Its second-quarter net profit rose 10 percent year on year, while loans and net fee income each increased 5 percent, supported by record wealth-management fees. ■