Singapore Airlines

[Ben]

How about the banking industry from 09 to 14? well things did not go south for the local banks (whose main exposure was Singapore); things went north. We had a) boom for housing loans where Singaporeans and foreigners happily took home loans or paid refinancing fees to refinance their housing loans, b) businesses (in Singapore, Asean & East Asia) experienced good times which led to more loans unlike during the 09 recession and c) Construction/Building boom due to more condo/HDB/infrastructure projects in Singapore.

Indeed the airline industry is tough, but the banking industry is not all roses either, especially after the GFC and the collapse of Lehman Brothers. The booming property market we saw in the last few years was a result of easy monetary policies and low interest rates. This has led to too much money chasing after few assets. However, low interest rates cut both ways. While it spur investments and spending, which led to higher loans for the banks, it also led to low margins for the loan bank loaned out. The NIM for past few years has been at historical lows.

Also, the battlefield for the loan market has been brutal. Besides the three local banks, we have a number of foreign banks trying to vie for a pie of the cake. Obviously, each one is trying to outdo the others with very competitive rates. So while SIA has to deal with low yields, DBS has to deal with low margins.