On the other hand, the big Singaporean banks are showing stronger performance than Thailand

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OCBC Profit Beats Estimates as Hong Kong Unit Bolsters Loans
30 April, Bloomberg

Oversea-Chinese Banking Corp., Southeast Asia’s second-largest bank, posted a higher-than-estimated 11 percent gain in first-quarter profit as it absorbed loans and deposits from the Hong Kong unit it acquired last year.

Net income for the three months ended March 31 climbed to S$993 million ($751 million) from S$899 million a year earlier, the Singapore-based bank reported Thursday. The average of six analyst forecasts in a Bloomberg survey was S$911 million.

United Overseas Bank Ltd., its smaller competitor, reported a 1.6 percent increase in profit.

Both lenders face the prospect of being able to charge borrowers more for loans amid rising domestic interest rates, which climbed to a six-year high in the first quarter. That may boost interest margins and offset any slowdown in lending volumes as the city’s economy cools.

“In terms of the banking sector, this is one sector that we are particularly overweight in because we think net interest margins will really help,” Kelvin Tay, a money manager at UBS Wealth Management in Singapore, said Thursday in an interview. “While we have passed the worst, we don’t see a significant increase this year” for loan growth, he said.

OCBC shares fell 2.1 percent to S$10.65 as of 12:41 p.m. on Thursday in Singapore as the stock traded without its latest dividend payout. UOB was little changed, compared with the benchmark Straits Times Index’s 0.4 percent loss.

While OCBC’s consumer loan spreads in Singapore improved, a 26 percent increase in deposits in the quarter and weaker income from money-market activities helped drag the bank’s net interest margin down to 1.62 percent from 1.7 percent a year earlier. UOB’s NIM rose three basis points to 1.76 percent.


DBS Profit

The margin for DBS Group Holdings Ltd., OCBC and UOB’s largest rival, gained three basis points to 1.69 percent in the period, the bank reported Monday. DBS posted a record S$1.27 billion profit for the quarter on higher net interest income and proceeds from selling a Hong Kong property investment.

OCBC’s net interest margin is expected to “gradually improve” this year, Chief Executive Officer Samuel Tsien said at a press briefing Thursday. The three-month Singapore interbank offered rate more than doubled in the first quarter to exceed 1 percent for the first time since 2008.

“More loans are being priced to higher interest rates,” said He Yuxuan, an analyst at KGI Fraser Securities Pte. “For the whole year, there will be an increase in interest income.”

Weaker Demand

OCBC’s loans grew 20 percent in the quarter as it incorporated lending from its OCBC Wing Hang Bank unit in Hong Kong, which it acquired last year for $5 billion. Excluding Wing Hang, OCBC said its loans rose 4 percent, while deposits gained 8 percent.

Loans are expected to increase this year at a mid-single digit percentage rate amid weaker demand in Singapore, Tsien told reporters. They grew 24 percent in 2014. The city’s economy expanded an annualized 1.1 percent in the three months through March from the previous quarter, down from a 4.9 percent rate in the preceding period.

“We need to be more careful,” Tsien said on the sidelines of the briefing. “What we want to do is to build up a quality loan business rather than going out to just increase loans, because the operating environment from the credit perspective that we are in is not so favorable.”

The lender’s net interest income climbed 15 percent from a year earlier, it said. UOB reported net income in the quarter of S$801 million as its net interest income climbed 8.3 percent, while fee and commission income gained 9.5 percent.

www.bloomberg.com/news/articles/2015-04-29/ocbc-first-quarter-profit-rises-11-beating-analyst-estimates

Should add that I don't think the banks pass that negative rate onto depositors, but even so means you'll realistically get nothing on your deposits for a while to come. There's a Bloomberg quicktake on it:
________________________________________________________________________________________
Less Than Zero
When Interest Rates Go Negative

Imagine a bank that pays negative interest. Depositors are actually charged to keep their money in an account. Crazy as it sounds, several of Europe’s central banks have cut key interest rates below zero. For some, it’s a bid to reinvigorate an economy with other options exhausted. Others want to push foreigners to move their money somewhere else. Either way, it’s an unorthodox choice that has created distortions in financial markets. Some commercial banks have started to pass negative rates onto their customers. It’s a strategy that could ultimately backfire.

The Situation

The European Central Bank chose to experiment with negative rates before turning to a bond-buying program like those used in the U.S. and Japan. It was the first major central bank to venture into negative territory and its deposit rate reached minus 0.2 percent in September, a level President Mario Draghi said was the “lower bound.” It effectively punishes banks that hoard cash at the central bank instead of extending loans to businesses or to weaker lenders. Sweden is using a similar combination of negative rates and bond-buying. Denmark pushed rates deeper into negative territory to protect its currency’s peg to the euro and Switzerland moved its deposit rate below zero for the first time since the 1970s. Since central banks provide a benchmark for all borrowing costs, negative rates spread to a range of fixed-income securities. By the end of March, more than a quarter of the debt issued by euro zone governments had negative yields. That means investors holding to maturity won’t get all their money back. While banks are reluctant to pass on negative rates for fear of losing customers, UBS has complained that its earnings are being crimped and Julius Baer began to charge large depositors for holding their cash.

The Background

Negative interest rates are a sign of desperation, a signal that traditional policy options have proved ineffective and new limits need to be explored. Rates below zero have never been used in an economy as large as the euro area. While there is no guarantee that negative rates will be able to achieve what they are meant to do, Draghi pledged during the height of Europe’s sovereign debt crisis in 2012 to do “whatever it takes” to save the area’s common currency, signaling the ECB’s willingness to be innovative. Policy makers are trying to prevent a slide into deflation, or a spiral of falling prices that could derail the recovery. The euro zone is grappling with a shortage of credit and unemployment near its highest level since the currency bloc was formed in 1999.

The Argument

In theory, interest rates below zero should reduce borrowing costs for companies and households, driving demand for loans. In practice, there’s a risk that the policy might do more harm than good. Janet Yellen, the U.S. Federal Reserve chair, said at her confirmation hearing in November 2013 that even a deposit rate that’s positive but close to zero could disrupt the money markets that help fund financial institutions. If banks make more customers pay to hold their money, retails clients may put their cash under the mattress instead. When banks absorb the costs of negative rates themselves, it squeezes the profit margin between their lending and deposit rates, and might make them even less willing to lend. Ever-lower rates are also raising concern that countries are engaged in a currency war of competitive devaluations as investors shift their money to places where it earns more.

www.bloombergview.com/quicktake/negative-interest-rates