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The Week Ahead: Banks On Tap

The Singapore market will be wheeling out the big guns, as the earnings season moves into another gear. We are expecting to hear from the three heavyweight banks next week.

Oversea-Chinese Banking Corporation (SGX: O39) should be the first of the three to report. In May, Singapore’s second-largest bank posted a very respectable 14% rise in quarterly earnings. Growth in the three months was driven by higher profits at its wealth management and insurance divisions. Great Eastern (SGX: G07), which is a subsidiary of OCBC. will also be reporting results.

Singapore’s third-largest bank, United Overseas Bank (SGX: U11), also managed to report a rise in profits last time. It said that loans growth increased 9.4%, while non-performing loan ratio was stable.

DBS Group (SGX: D05) only managed to increase profits slightly last time. But that was better than market expectations. Net interest income was almost flat. That was attributed to softer interest rates counterbalanced by higher volumes.

All eyes will be on Singapore Exchange (SGX: S68) as it reports full-year numbers. The third quarter was somewhat pedestrian, as earnings fell 6.8%. But the bourse said that it has seen continued momentum in the equities market, with increased participation from retail and institutional customers.

Other companies that will report results include SIA Engineering (SGX: S59), Ascendas REIT (SGX: A17U), Sembcorp Marine (SGX: S51) and Singapore Airlines (SGX: C6L).

Over in the US, McDonald’s (NYSE: MCD), Procter & Gamble (NYSE: PG) and Coca-Cola (NYSE: KO) could provide some useful insights into consumer spending both in the US and abroad when they announce results.

On the economic front, it is interest-rate time for the Fed again. In June, the rate-setting committee hiked the Fed Fund rate by 0.25% to between 1% and 1.25%. The Fed also said it expects the US economy to grow at a modest pace. But the jury is still out on inflation. It would be a surprise if the Fed raises interest rates next week.

We will also get a sneak peek at US economic growth for the second quarter. It is looking like it could be around 1.7%, which would be a faster rate of expansion than last year. In the first three months of 2017, consumers and exporters did all the heavy lifting. Can they do the same in the second quarter?

Japan will report inflation numbers for June. The Bank of Japan had set an inflation target of 2% by 2018. But it has pushed back the timing for achieving its goal by another year to 2019. The BoJ has moved the goal post six times since 2013.

And finally Singapore will report inflation numbers for June. Consumer prices rose 1.4% in May, compared to just 0.4% in April. The jump in prices was caused by a surge in the cost of housing and a faster increase in food prices.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned. The Motley Fool has recommended Singapore Exchange and UOB.