Thursday, November 17, 2016

Singapore Banks and Rising Rates

If US rates go up, how much will Singapore banks benefit?

SIBOR tends to follow the fed funds rate:

And the banks' Net Interest Margins (NIM) roughly follow it:

Its hard to tell, because the correlation is not direct, and there is probably a lag.  I'll assume that NIM goes back up to 2%, which is about halfway back to the highest level, and roughly what it was in 2010.  If this happens, I estimate that all three banks would increase their earnings by 15-20%.

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