The Positives
+ NIM and NII continue to increase YoY. NII rose 5% YoY to S$3.4bn due to an 8bps NIM increase to 2.13% (3Q23: 2.19%) as interest rates continue to remain high, despite loan growth remaining flat YoY. Loan growth was stable as higher trade and consumer loans were offset by lower non-trade corporate loans. Nonetheless, the Citi Taiwan consolidation contributed S$10bn to loans.
+ Fee income recovers strongly. Fee income rose 31% YoY to S$867mn. WM fees increased 41% YoY driven by strong net new money inflows as customers shifted deposits into bancassurance and investments, while card fees grew 27% YoY from higher spending and the integration of Citi Taiwan. Loan-related fees rose 80% YoY, while investment banking fees were up 26% YoY. These increases were moderated by a 4% YoY decline in transaction fees as trade finance slowed.
+ Other non-interest income rose 9% YoY. Other non-interest income growth was mainly due to higher treasury customer sales and gains from investment securities. Notably, commercial book accounts for a majority of other non-interest income was at 55%, while treasury markets accounts for 45%.
The Negatives
– Allowances rose 438% YoY. 4Q23 total allowances were higher 438% YoY due to normalised GP of S$3mn (4Q22: writeback of S$116mn) and higher SP of S$139mn (4Q22: S$74mn). As a result, 4Q23 credit costs rose to 11bps, with FY23 credit costs at 11bps. The NPL ratio was flat at 1.1% (4Q22: 1.1%), while GP reserves grew 4% YoY to S$3.90bn. Notably, management mentioned S$2.2bn of management overlay, which could be released if SP comes in higher than expected.
– CASA ratio decline continues. The Current Account Savings Accounts (CASA) ratio fell 8% points YoY to 52.3%, mainly due to the high-interest rate environment and a continued move towards fixed deposits (FDs). Nonetheless, total customer deposits grew 2% YoY to S$535bn as the decline in CASA deposits was offset by growth in FDs and a contribution of S$12bn from the Citi Taiwan consolidation.
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Glenn covers the Banking and Finance sector. He has had 3 years of experience as a Credit Analyst in a Bank, where he prepared credit proposals by conducting consistent critical analysis on the business, market, country and financial information. Glenn graduated with a Bachelor of Business Management from the University of Queensland with a double major in International Business and Human Resources.
