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Rising Rates Signal Better Times For Major Banks – DBS

Tom Burroughes

18 February 2022

The world’s banking industry, which has seen margins pummelled by ultra-low interest rates since the 2008 financial crisis, is likely to benefit now that central banks are tightening monetary policy in the West and specific regions, Singapore-based  said in a note.

DBS said that it is positive on the global financial sectors. 

“Against a backdrop of global economic recovery, key banking indicators such as net interest margin (NIM), credit charge, fee income, and loan growth are likely to improve. Moreover, with value plays back in focus, we expect financials to outperform the broader market,” Joanne Goh and Yeang Cheng Ling, senior investment strategists at DBS Bank, said in a note.

“Earnings upgrades should continue in this sector as the . Our sensitivity analysis indicates that every 25 bps increase in interest rates would result in net interest margin increases of 3 to 7 bps, with a corresponding 2 to 6 per cent increase in net profit across Singapore banks,” it added.