After last week’s article on Keppel Infrastructure Trust, some of you have asked for an update on the Singapore Banks. DBS, UOB and OCBC are down about 10 – 15% from their highs. At this price, they pay about 5% dividend yield, which is pretty juicy. And yet conventional wisdom is that banks are a bad buy here because of (1) peak interest rates means falling net interest margins going forward and (2) we’re going into a recession so loan defaults are going up. As always, the truth is seldom so straightforward. So let’s spend some time discussing whether the banks are a good buy here.
