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Benefiting from interest rate hikes.

Saturday, April 30, 2022

If our purpose is to generate passive income, why put money in fixed deposits when we can have a share of the profits generated by the banks?

Share as in sharing?

Shareholder?

AK so clever. ;p

Singapore banks will benefit significantly from interest rate hikes in the coming quarters.

The strategy to accumulate stocks of Singapore banks during the pandemic has turned out well. 

The investments should continue to bring home the bacon and in bigger portions too.

Bacon is yummy.

Sedap!

AK's YouTube channel with highlights from DBS 1Q 2022:





Huat ah!

Related posts:
1. Buying DBS, OCBC and UOB.
2. Higher dividends from DBS, OCBC and UOB.
3. Largest investments 1Q 2022.




4 comments:

Cory said...

Banks seem obvious will gain from this rate hikes and recovery. Bao Jiak ?

AK71 said...

Hi Cory,

Ho ho ho!

Ho jiak! ;p

Kent said...

Hi AK,

thanks for your timely sharing! With this post, are you increasing your stakes in the banks then?

My investments in banking sector are almost on par with yours (based on your post on your largest investments in 1Q 2022), though mine is very largely skewed towards DBS among our local trio and includes some exposures in a few other major global banks listed in US and HK as well. However, I've some reservation in raising my stakes for now, though I'm happy to maintain my holdings for their dividends and long-term capital appreciation.

With a flattening yield curve which has even momentarily inverted, banks' net internet margins may be squeezed. While jobs data, consumer spending (after being restrained for a couple of years) and corporate earnings remain resilient, if the Fed is not successful in maneuvering a soft landing for the US economy, coupled with continual global supply chain disruptions not helped by China's zero-COVID policy and geopolitical conflicts, global economies may be heading into a recession or even stagflation. Hence, I've largely been sitting on the fence since the beginning of this year.

Regards,
Kent

AK71 said...

Hi Kent,

For sure, if the Fed is unable to engineer a soft landing and triggers a recession, banks could suffer once more.

As my exposure to the banking sector is limited to DBS, OCBC and UOB, I am less worried as they are well capitalized and well managed.

Still, when the bear emerges, no one is spared.

I might increase exposure if Mr. Market goes into a depression once more but not now. :)


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