1Q22: NIM inflection point; credit costs low
? DBS’s and OCBC’s 1Q22 earnings beat consensus but UOB missed. NIM
has started trending upwards. Wealth was decent while treasury dipped yoy.
? No indication of major asset quality issues; we watch out for revised credit
cost guidance. Management overlays (c.S$400m-S$1.5bn) seem intact.
? We expect OCBC’s share price to trend positively given the positive credit
cost surprise. UOB could see share price weakness given MTM losses.
DBS: NIM +3bp qoq; single-digit credit cost maintained
1Q22 net profit of S$1.8bn w as 6% above our estimate but in line with consensus. Earnings
were 10% lower yoy but 30% higher qoq. Generally, every line item was in line with our
expectations with total income at S$3.75bn vs. our S$3.7bn. Loan loss w as the key
difference at S$55m (5bp) vs. our S$80m (8bp) due to general provision writebacks. Fee
income fell 7% yoy but rose 9% qoq. NIM rose 3bp qoq to 1.46% in 1Q22. Wealth income
slid 21% yoy as expected but came in within our estimate for 1Q22. Loan-related fee was
strong with robust qoq (+87%) and yoy growth (+21%). PPOP was 5% above our estimate
as overhead expenses were lower than our expectations. CTI moderated to 44% in 1Q22
as total income rebounded qoq. DBS declared interim DPS of S$0.36 in 1Q22 (FY21:
S$1.17). Mid-single-digit loan growth guidance was maintained on the assumption of
weaker growth in 2H22F. Fee outlook is mixed.
OCBC: NIM +3bp qoq; 6bp credit cost was a positive surprise
1Q22 earnings were 13% above our estimate but in line with consensus. Every line item
beat our expectations, from NII to PPOP. Lower loan loss provisions were the key positive
variance – at S$44m (6bp) vs. our S$160m (22bp). There was a major reduction in specific
provisions (SPs) to 4bp (4Q21: 54bp) while GP came in at 2bp. NII w as steady at +1% qoq
but NIM climbed 3bp qoq to 1.55% (vs. our expected 1.53%). Non-II w as +8% qoq (-23%
yoy) on the back of stronger profit from life insurance (+10%) and steady fees and
commissions. Staff costs were lower than our expectations, with CTI at 45.6% (4Q21:
51%). PPOP was 9% above our expectations.
UOB: Loan grew 3% qoq but treasury income and tax were drags
1Q22 net profit of S$906m w as 6%/20% below our/consensus estimates. UOB missed our
forecasts due to higher tax expenses (c.21% tax rate in 1Q22 vs. c.17% in FY21). NIMs
rose 2bp qoq to 1.58% in 1Q22 while loans grew 3% qoq. As a result, NII climbed 1%
(+10% yoy). Fee income was flattish qoq (-10% yoy) in 1Q22 as credit card fees were
seasonally lower and weak market sentiments hit wealth management and fund
management fees. Although customer-related treasury income rose strongly on elevated
hedging needs, total treasury income dipped (-44% qoq/-22% yoy) due to unrealised MTM
on investments. No change to mid-to-high single-digit loan growth, stable CTI and c.20-
25bp credit cost guidance. On balance, total income fell 3% qoq and 5% yoy. PPOP held
steady qoq (-7% yoy) as CTI w as stable at 45% in 1Q22 (4Q21: 45%). UOB recorded
impairment expenses of S$178m or 23bp credit costs (calculated figure). Loan SPs alone
accounted for 19bp of this.