UOB to struggle with sustaining margins in 2016

China margins are already under pressure.

UOB’s margins in Singapore, Malaysia and Indonesia are holding well, but are buckling in China, according to a report by RHB. Net interest margin (NIM) is expected to remain stable for at least another quarter, though.

“Management believes its strategy of pushing USD deposits to manage funding costs can sustain NIM in 4Q15,” the report said.

Meanwhile, 2016 might prove to be difficult as UOB expects a struggle in maintaining margins. UOB management believes that possible reduction in policy rates despite already having been slashed six times this year along with late-June 2015’s removal of the 75% cap on loan-to-deposit ratio (LDR) of banks will make maintaining a margin in China challenging.

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