Anticipations of a weaker Q2 performance are set for the local banks due to rising costs and provisions. Analysts foresee earnings peaking this year as loan growth slackens amid potential Fed rate hikes. Net interest income is projected to decelerate further due to increased funding costs and reduced loan volumes. Depositors shifting to higher-yielding fixed deposits have raised costs, and higher borrowing costs alongside inflation may result in banks' non-performing loan ratios sliding after last year's improvement. Despite this, analysts are not overly concerned as they expect asset quality to remain stable and credit costs manageable. Ahead of the earnings release, DBS has maintained ‘hold’ ratings on UOB and OCBC, while Citi Research analyst Tan Yong Hong has a more positive outlook on OCBC.