WORLDWIDE: HEADLINES
Singapore Bank DBS Profit Rebounds, Seen Gaining As Rates Outlook Improves
DBS Group (DBSM.SI) flagged strong business momentum after its profit rose to a record last year, cementing a recovery for Southeast Asia’s largest lender as pandemic-hit economies rebound and boost loan growth and asset quality.
Singapore lenders are also expected to be big beneficiaries of rising interest rates, while the city-state’s economy is forecast to grow 3% to 5% this year after expanding at its fastest annual pace in over a decade in 2021.
Krishna Guha, an analyst at Jefferies said that while the bank’s fourth-quarter profit was slightly below estimates due to lower than expected non-interest income, growth in other revenue metrics was “outstanding.”
“Guidance for 2022 is in line with our current inputs but for the credit costs, and is likely to be the next driver of positive earnings revisions,” Guha said in a note.
DBS, the first Singapore bank to report this season, said net profit for October-December rose to S$1.39 billion ($1.03 billion) and follows a particularly weak pandemic-hit year when profit tumbled to a three-year low in the fourth quarter.
The result however missed an average estimate of S$1.47 billion from four analysts polled by Refinitiv, and was also 18% lower than the third quarter, hit by a 41% drop in non-interest income. DBS shares eased 0.6% in early Monday trade.
“We look forward to the coming year with a prudently managed balance sheet that is poised to benefit from rising interest rates,” DBS CEO Piyush Gupta said in a statement, adding that the bank expects mid-to-single digit loan growth or better this year, after reporting a 9% increase last year.
DBS, which earns most of its profit from Singapore and Hong Kong, struck a deal last month to pay S$956 million to buy Citigroup’s (C.N) consumer business in Taiwan, as it shores up regional acquisitions to power growth.
Full coverage: REUTERS
No Sign Of Light At End Of Tunnel For Credit Suisse Investors
Weary Credit Suisse investors fear a long wait for the bank to get back on piste after a string of scandals which have wiped billions off its market value and piled pressure on management.
While Switzerland’s second-largest bank says that it can create value by serving its wealthy clients with “care and entrepreneurial spirit”, the market is not yet convinced and its share price has dropped by nearly a third in a year, knocking some 10 billion Swiss francs ($11 billion) off its valuation.
Meanwhile, other big European banks, buoyed by the prospect of rising interest rates, have gained almost 50% in stock market value over the same period and its cross-town Zurich rival UBS (UBSG.S) has left Credit Suisse (CSGN.S) for dust.
“Credit Suisse has a long list of scandals and problems,” Stefan Sauerschell, a bond investor with Union Investment, said of the bank, which was founded in 1856 and says it has 48,770 employees and 3,510 relationship managers around the world.
“We always thought the management process would be improved and then the next punch landed. If there was another billion-plus loss, it would be a catastrophe,” Sauerschell added.
Things did not get any better this week, however, when Credit Suisse reported a worse-than-expected $2.2 billion quarterly loss and warned of bleak prospects for 2022, when it said earnings would be hit by restructuring costs and pay.
That outlook knocked its already battered shares further, after a year when the bank racked up a 1.6 billion franc loss as a result of the collapse of $10 billion in supply chain finance funds linked to insolvent British finance firm Greensill and a $5.5 billion hit from the implosion of investment fund Archegos.
Full coverage: REUTERS
WORLDWIDE: FINANCE/BUSINESS
Asia Stocks Wary On Ukraine Warnings, Oil Climbs
Asian shares slipped on Monday as warnings Russia could invade Ukraine at any time sent oil prices to seven-year peaks, boosted bonds and belted the euro.
The United States on Sunday said Russia might create a surprise pretext for an attack, as it reaffirmed a pledge to defend “every inch” of NATO territory.
The cautious mood saw MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) drop 0.2%, while Japan’s Nikkei (.N225) lost 2.1%.
S&P 500 futures edged up 0.2% and Nasdaq futures 0.1% after steep losses on Friday.
Markets have been in convulsions since an alarmingly high U.S. inflation reading sparked speculation the Federal Reserve might raise rates by a full 50 basis points in March.
There was even chatter about an emergency inter-meeting hike. That was spurred in part by the timing of a closed Fed Board meeting for Monday, though the event seemed routine.
The talk was tamped down when the Fed released an unchanged bond buying schedule for the coming month, since the central bank has said it would only hike after its buying had ceased.
San Francisco Fed President Mary Daly also played down the need for a half-point move in an interview on Sunday, saying being too “abrupt and aggressive” on policy could be counter-productive.
Futures markets since have scaled back the risk of a half-point rise to around 40%, when it had been priced as a near certainty at one stage last week.
“Broad-based inflation pressures have given rise to earlier-than-expected pressure for a synchronized shift toward restrictive policy across the globe,” said JPMorgan chief economist Bruce Kasman.
Full coverage: REUTERS
Ukraine Tension Reins In Euro, Drives Rush To Safe-havens
The dollar and safe-haven currencies held gains and riskier ones struggled for traction on Monday, with traders on edge about the prospect of war in Europe and unsettled by soaring inflation.
The risk of war in Ukraine has seen the euro retreat to $1.1360 from last week’s top of $1.1495.
The Australian and New Zealand dollars were also pinned below last week’s levels and the Russian rouble was smarting after suffering its sharpest fall in nearly two years on Friday.
The safe-haven yen has climbed to 115.50 yen from a five-week low of 116.34 last week.
Russia could invade Ukraine at any time and might create a surprise pretext for an attack, the United States said on Sunday. German Chancellor Olaf Scholz, who heads to Kyiv on Monday and Moscow for talks with President Vladimir Putin on Tuesday, warned of sanctions if Moscow did invade.
The flashpoint adds to stress already evident in markets’ volatile response to hotter-than-expected U.S. inflation data last week, and although concern about an emergency rate hike has subsided analysts expect the dollar to stay supported.
“With Fed hike expectations surging again and geopolitical tensions in Ukraine escalating dramatically the dollar index should be back on the front foot again,” said analysts at Westpac.
The dollar index was steady at 95.937 early in the Asia session. Analysts see the euro, which dropped 1.2% on the yen on Friday, and oil importers’ currencies as most at risk from conflict in Ukraine. Oil prices have surged.
Full coverage: REUTERS
Oil Prices Jump More Than 1% To 7-year Highs On Supply Jitters
Oil prices on Monday hit their highest in more than seven years on fears that a possible invasion of Ukraine by Russia could trigger U.S. and European sanctions that would disrupt exports from the world’s top producer in an already tight market.
Brent crude futures was at $95.56 a barrel by 0235 GMT, up $1.12, or 1.2%, after earlier hitting a peak of $96.16, the highest since October 2014. U.S. West Texas Intermediate (WTI) crude rose $1.28, or 1.4%, to $94.38 a barrel, hovering near a session-high of $94.94, the loftiest since September 2014.
Comments from the United States about an imminent attack by Russia on Ukraine have rattled global financial markets.
Russia could invade Ukraine at any time and might create a surprise pretext for an attack, the United States said on Sunday.
“If … troop movement happens, Brent crude won’t have any trouble rallying above the $100 level,” OANDA analyst Edward Moya said in a note.
“Oil prices will remain extremely volatile and sensitive to incremental updates regarding the Ukraine situation.”
The tensions come as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, struggle to ramp up output despite monthly pledges to increase production by 400,000 barrels per day (bpd) until March.
The International Energy Agency said the gap between OPEC+ output and its target widened to 900,000 bpd in January, while JP Morgan said the gap for OPEC alone was at 1.2 million bpd.
“We note signs of strain across the group: seven members of OPEC-10 failed to meet quota increases in the month, with the largest shortfall exhibited by Iraq,” JP Morgan analysts said in a Feb. 11 note.
Full coverage: REUTERS
