Its performance would have been better if not for higher collective impairment set aside, which rose drastically from S$180m in 2Q08 to S$378m in 1Q09 and S$465m in 2Q09. This also hurt its 1H09 earnings based on YoY change. Management attributed this to the economic uncertainty, and about S$321m was set aside for loans investments and foreclosed assets in the quarter.
Net Interest Margin (NIM) of 2.35% was better than 2Q08's level of 2.23%, but was down from 2.41% in 1Q09.
Customer loans grew modestly, up 0.4% YoY or down 1.9% from the previous quarter, to S$97.8 bn by end-Jun 2009.
Non-performing loan (NPL) rose from S$1547m in 2Q08 to S$2185m in 1Q09 and hit S$2476m in 2Q09. NPL ratio also increased from 1.5% to 2.1% to 2.4% for the same periods.
Management has declared an interim one-tier tax-exempt dividend of 20 cents (same as 2Q08: 20 cents). The dividend will be paid on 2 Sep 2009.
We currently have a HOLD rating on the stock, but will look to review our earnings and fair value estimates after this evening's meeting with management.
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