Chart of the Day: Singapore’s top banks see plunge in trading and investment income in 4Q

Discover which bank is most at risk.

DBS, OCBC and UOB will be releasing their results next week, and analysts are expecting limited room for positive earnings surprises.

According to a report by Maybank, trading and investment income was likely weak from volatile capital markets. This implies risks of earnings shortfalls. Such income was behind banks’ strong earnings deliveries in the past few quarters, among others.

As it is, T&I income is historically the weakest in 4Q. JP Morgan Chase, Morgan Stanley, Citigroup and Bank of America reported results recently. Most fell short of expectations in part due to stifled trading income. Their results may provide clues on the earnings of Singapore banks.

DBS is most at risk. Of the three, DBS is most dependent on T&I income. This accounted for an average 29% of its PBT in the past four years, towering above UOB’s 18% and OCBC’s 13%. This means DBS’s 4Q14 earnings could have the highest earnings risk. Given volatile capital markets in 4Q14, Maybank analysts think T&I income could be uncharacteristically weak.

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