SINGAPORE — Singapore’s top three banks are due to report second-quarter earnings this week, and investors will be watching for any announcements on dividend payments.

Oversea-Chinese Banking Corp and United Overseas Bank will report earnings on Wednesday, while the country’s largest bank DBS Group Holdings will do so on Thursday.

Here’s what analysts are expecting from the banks’ financial report cards, according to estimates compiled by Refinitiv:

The earnings reports come as Singapore reports a renewed increase in daily Covid-19 infections. Stricter social-distancing measures imposed in early-May led to a 2% economic contraction in the second quarter compared to the previous three months, according to official advance estimates.

Given the continued threat of Covid — particularly the delta variant — on the economy, Singapore banks would likely keep provisions that they have set aside for potential loan losses, analysts said.

“We do not believe banks will write back general provisions amidst the uncertain macroeconomic outlook,” said Rui Wen Lim, an equity analyst at DBS Group Research.

Some banks in the U.S. and Europe have started releasing provisions in the second quarter, which helped boost their profitability. HSBC on Monday said it released a net $719 million, thanks largely to a better economic outlook.  

Shares of all three Singapore-listed banks have recorded double-digit gains this year as the global economic rebound from a pandemic-induced recession led investors favor to “cyclical” stocks.

Markets or stocks that are “cyclical” rise and fall in conjunction with fluctuations of the economy.

OCBC shares have risen 22.3% this year as of Monday — the largest gains among the banking trio. DBS and UOB have jumped by 21.3% and 15.7%, respectively. All three banks beat the benchmark’s Straits Times Index’s 11.2% gain so far this year.

Analysts said the shares could get a further boost from higher-than-expected dividends.

Singapore’s financial regulator, Monetary Authority of Singapore, said last week it will not extend restrictions on bank dividend payments. Last year, MAS urged banks to cap dividends given the economic uncertainties during the Covid-19 pandemic.

Krishna Guha, equity analyst from investment bank Jefferies, said the MAS announcement was a surprise.

“We had expected caps to be lifted in phases. As such, complete re-instatement is a positive surprise,” Guha wrote in a report last week. He predicted that the three banks would raise dividends at least to pre-pandemic levels this year.

Jefferies has a “buy” rating on all three Singapore banks.