Banks, SIA drag the STI down 2.5%

Date: August 4, 2025

• The STI fell every day of the week, down 2.5% to 4,153.83
• Banks were the main drag, followed by SIA’s 10% loss
• Wall St wobbled on Friday after weak jobs report, odds of Sep rate cut up sharply
• Seatrium’s 1H profit quadrupled to S$144m, stock fell after news of S$240m corruption penalty
• Keppel reported 24% rise in 1H profit to S$377.7m, shares rose 3.5%
• OCBC reported 7% drop in 2Q profit to S$1.82b

Five consecutive days of selling

The Straits Times fell every day last week, losing about 108 points or 2.5% at 4,153.83. Banks led the way, with DBS falling S$1.46 or 3% to S$47.60, followed by UOB’s S$1.08 or 2.9% loss at S$36.07 and OCBC’s S$0.39 or 2.3% drop to S$16.79.

Also contributing to the index’s fall was Singapore Airlines following release of disappointing earnings – the stock lost S$0.75 or almost 10% at S$6.82.

The US Fed held rates steady as expected

The US central bank held its key rate steady at its fifth monetary policy meeting of the year and chair Jerome Powell signalled that policymakers were in no hurry to cut interest rates.

Stocks sold off after the Fed’s messaging, and traders were quick to dial back rate cut odds for September.

Wall St stocks plunged and bonds rallied on Friday after weak jobs report; probability of Seo rate cut up sharply

US stocks and bonds fell sharply on Friday ater the Bureau of Labor Statistics said the U.S. economy added just 73,000 jobs in July. May and June’s numbers were also revised sharply lower by 258,000 jobs.

“The employment report from top to bottom had a recession label all over it,” David Rosenberg, of Rosenberg Research, told US newspaper Barron’s. “Outside of the noncyclical health and education sectors, payrolls actually shrunk in July.”

The weak jobs report sent bonds rallying, pushing yields lower. The yield on the 2-year Treasury note fell to 3.7%. The 10-year yield dropped to 4.22%.

As a result, the odds of an interest rate cut in September rose from 37% on Thursday to 80% on Friday.

For the week, the S&P 500 slid 2.4%, while the tech-heavy Nasdaq Composite fell 2.2%. The blue-chip Dow Jones Industrial Average slumped 2.9%.

Seatrium’s 1H profit quadrupled to S$144m, stock fell after news of S$240m corruption penalty

Seatrium’s net profit for the six months ended Jun 30 grew 301.3% to S$144.4 million, from S$36 million during the same period last year, marking the second time of net profits for the first half since its reconstitution in 2023.

Revenue for H1 was up 33.7% at S$5.4 billion, from S$4 billion in the corresponding period in 2024, “reflecting strong execution of its robust order book”, said the offshore and marine specialist in a bourse filing on Thursday.

However, the strong results were overshadowed by news the day before that the company has is putting a long-running corruption case behind it with the payment of financial penalties of more than S$240 million to the authorities in Brazil and Singapore.

As a result, Seatrium’s shares dropped S$0.13 or 5.4% on Thursday to S$2.27 on volume of 42m.

The selling came despite Seatrium stating that that there will be no material impact to its net earnings and net tangible asset per share for the financial year ending Dec 31, 2025. This is because it had previously made provisions in its financial statements for the in-principle settlement payment and financial penalty.

On Wednesday, Citi assigned Seatrium a “buy” call and a target price of S$2.65.

The bank said: “Although the share price had recovered from the lows during the initial MAS and CAD investigation announcement, we believe the conclusion of the investigation will lift the remaining overhang on Seatrium. The next milestone (or hurdle) to future value creation may come with improving margins and financials in its results’’.

“We apply a target multiple of 1.2 times on FY2026 (estimates), as we believe the market will look into its long-term prospects as new higher-margin contracts should raise returns further and push return on equity higher.”

SIA reported 59% profit fall, analysts recommend “sell’’

Singapore Airlines reported a 59% drop in its net profit for its first quarter ended 30 June 2025 to S$186m due to lower interest income and the share of losses of associates.

Net profit dropped to $186 million for the first quarter in the 2025/2026 financial year that ended June 30, down from $452 million in the corresponding period a year ago whilst operating profit fell around 14% to $405 million.

“In addition to the lower operating profit, the reduction in net profit was largely attributable to a lower interest income on the back of lower cash balances and interest rate cuts, and the group recording a share of losses of associated companies compared to a share of profits for the same quarter last year,” SIA said.

This loss was from Air India’s financial results, which were not part of the group’s results for the same quarter in 2024.

Maybank downgraded the airline to “sell” from “hold”, lowering its target price to S$6.75 from S$6.85, and CGS International (CGSI) downgraded SIA to “reduce” from “hold”, cutting its target price to S$6.80 from S$6.88. DBS Group Research maintained “hold” and raised its target price to S$6.40 from $6.30.

Citing weaker-than-expected earnings from SIA and its share of losses for Air India, which SIA owns a 25.1% stake in, CGSI analyst Raymond Yap said on Monday: “We downgrade our recommendation on SIA to reduce, and advise investors to take profit’’.

“SIA’s share price is now trading at a historical price-to-book-value of 1.45 times, close to three standard deviations above the mean since 2011, which we view as very rich.”

Maybank analyst Eric Ong on Monday noted that Air India losses dragged on SIA’s bottom line in spite of lower fuel prices supporting operating performance.

“We also cut our FY2026 to FY2028 (estimates for) core earnings per share by 25 to 29 per cent to factor in rising non-fuel costs and weaker cargo business. We think the share price has run ahead of its fundamentals and downgrade SIA,” Ong said.

On Tuesday, SIA’s shares plunged S$0.56 or 7.4% to S$7.04 on volume of 38.5m. They continued to slide on Wed and Thursday before rebounding slightly on Friday to finish the week at S$6.82.

Keppel reported 24% rise in 1H profit to S$377.7m, shares rose 3.5%

Asset manager Keppel Corp saw net profit rise 24.2% to S$377.7 million for the first half ended Jun 30, driven by growth in its real estate segment.

This translates to an earnings per share of S$0.208, up 23.1% from S$0.169 a year earlier. In response, Keppel’s shares on Thursday rose S$0.29 or 3.5% to S$8.47 on a day when the STI plunged almost 46 points or 1.1% to 4,173.77. They finished the week at S$8.31.

The profit growth came even as Keppel’s top line fell 5.2% to S$3.1 billion. Revenue from the infrastructure segment was down by 12% at S$2 billion, with lower net generation in the integrated power business. The segment’s net profit fell 4.9% to S$346.6 million.

Keppel announced an interim dividend of S$0.15 per share – unchanged from the year-ago period, as well as a S$500 million share buyback programme.

The repurchased shares will be used in part for the annual vesting of employee share plans, and as possible currency for future merger and acquisition activities.

Separately, Keppel has identified a portfolio of non-core assets with a carrying value of S$14.4 billion to be “substantially monetised” by 2030.

The divestment portfolio comprises legacy offshore and marine assets, residential landbank, selected property developments and investment properties, and S$2.9 billion of embedded cash and receivables.

OCBC reported 7% drop in 2Q profit to S$1.82b

OCBC on Friday reported a 7% fall in its net profit for the second quarter ended 30 June to S$1.82 billion largely due to a 6% fall in net interest income to S$2.28 billion, as net interest margin (NIM) fell 28 basis points (bps) to 1.92% from 2.2% a year ago.

On a quarter-on-quarter basis, NIM fell 12 bps. Most of this decline was attributed to a “sharp drop” in the Singapore Overnight Rate Average (Sora) and the Hong Kong Interbank Offered Rate (Hibor) over the quarter.

The bank’s Q2 net profit of S$1.82 billion beat the S$1.79 billion consensus forecast in a Bloomberg poll of six analysts.

OCBC declared an interim dividend of S$0.41 per share, down from S$0.44 a year ago.

Group chief executive officer Helen Wong said that this was in line with the bank’s 50 per cent interim payout policy.

It “remains committed” to its 60% total dividend payout target for FY2025, along with its S$2.5 billion two-year share buyback plan, she added.