Here's what could lead Singapore banks to remain focused on funding

Just in case liquidity tightness ensues.

According to Barclays, Singapore banks showed slight margin pressure for 3Q13 as they boosted liquidity ahead of the expected tapering in quantitative easing in the US, lower fee income due to market volatility and solid asset quality across all key geographies.

The management teams guided for margins to remain stable near term and for loans to grow at a slower pace next year.

Here's more from Barclays:

Uncertainty over the timing of the US tapering (Barclays Research now estimates March 2014) may lead the banks to remain focused on funding in case of liquidity tightness in the region.

We continue to like the Singapore banks for their defensive qualities and strong funding franchise although near-term positive catalysts are lacking. UOB (OW) remains our top pick among the local banks, followed by DBS (EW) and OCBC (UW).

3Q13 results – two beat, one in-line: DBS's results were in-line with our expectations as its trading gains and markets-related income were weaker q/q due to market volatility as we had expected.

UOB beat consensus expectations by 4% on low credit costs and expenses. OCBC beat expectations due to mark-to-market gains in its Great Eastern's non-participating fund.

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