Earnings results for 3Q2014 of DBS Group Holdings, Oversea-Chinese Banking Corp and United Overseas Bank are likely to be a high point of sorts for the current results season.

Apart from the large market values of these banks, last week was when the US Federal Reserve wound up its controversial quantitative easing programme, setting the stage for an eventual uptrend in global interest rates.

Interest rates of almost zero have squeezed the net interest margins (NIMs) of DBS, OCBC and UOB.

The three banks have huge pools of current account and savings account deposits that are hard to lend at decent rates in the current environment.

And, while they pay almost nothing to CASA depositors, maintaining those accounts is costly.

Now, as interest rates begin rising, they might begin to see improved profitability.

Yet, the banks will also need to overcome the additional costs of tougher Basel III standards, which include new Liquidity Ratio requirements.

On top of that, competition for deposits is heating up.

While DBS, OCBC and UOB have ample deposits, the loan-to- deposit ratio (LDR) across the system is nudging 100%.

Indeed, major banks have been running campaigns to draw in CASA deposits in recent months.

In the months ahead, the depositgathering power of the local banks will really start to count.

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