(SINGAPORE) Major Singapore companies are expected to report generally strong second quarter and half year earnings, but there is less optimism that this will hold true for the rest of the year.

The interim reporting season is set to pick up pace in the coming few weeks, as about 400 companies with a December financial year-end announce their results for the three months and six months ended June 30, 2008.

Positive results are seen for key sectors such as banks, real estate investment trusts (Reits) and marine and energy groups, but analysts appear more cautious on property developers.

CIMB-GK research head Kenneth Ng is projecting single-digit earnings growth for the local banks, with growth likely to come from all angles. 'Generally, we think that the banks should not surprise on the downside, helped by net interest income,' he said.

Macquarie Research Equities also highlighted in a recent report that the bulk of banks' earnings should come from net interest income, which will likely rise 9.7 per cent year-on-year for Q2 2008.

However, non-interest income may contract 13.8 per cent year-on-year owing to the absence of one- off gains, and further weakened by weak capital markets, Macquarie said.

In a report released last week, Pauline Lee of Kim Eng Research said that loans growth for H1 2008 should be strong although loans growth could get 'more challenging' moving into H2 2008 amid 'the slowdown in property transactions and softening economic fundamentals'.

However, significant write-downs on asset- backed security collateralised debt obligations (ABS CDOs) are not expected to surface as local banks have made provisions for up to 85-100 per cent of their ABS CDOs with US sub- prime exposure, she said.

With the slowing economic environment, the banks are working to keep costs down. Still, while margins have improved, the question remains whether 'fees in investment banking activities can improve', Mr Ng said.

Banks that are exposed to sectors which are seeing weak performance may also feel the repercussions. Given the poor non-oil domestic exports (NODX) numbers that were released last week, the export sector could be a worry, Mr Ng pointed out.

'And should high-end property prices come down, developers could suffer as asset values fall,' he added. This could impact the banks' exposure to the property sector.

UOB kicks off the reporting season for the local banks on Aug 5 while DBS Group and OCBC will both release results on Aug 7.

Reits, which have already started reporting, are expected to perform well for Q2 2008.

Referring to year-on- year dividend growth, UBS analyst Alastair Gillespie said he expects 'between 14-15 per cent coming through, especially from office Reits given the lift in office rents'. He added that income fundamentals should be robust as debt refinance risk has been well managed.

CapitaMall Trust (CMT) released its results last week, chalking up a net property income of $83.6 million, 24.7 per cent higher year-on-year. Distributable income for the quarter was $58.6 million, while distribution per unit (DPU) for the quarter beat CMT's forecast, coming in 1.7 per cent higher at 3.52 cents.

Ascendas Real Estate Investment Trust (A-Reit) posted a net distributable income of $51.8 million for the first quarter ended June 30, up 15.9 per cent. DPU for the quarter came in 15.4 per cent higher at 3.89 cents, which represents a yield of 7 per cent on the June 30 closing price of $2.21 per A-Reit unit.

For the property developers however, Q2 2008 results are expected to be comparable to those of the first quarter, which were rather weak. Analysts noted that the residential property sector has seen a slowdown of sorts this year, with few new launches.

As last year was a record year for residential properties, the biggest challenge will be pulling off a repeat performance.

'Stocks like CapitaLand saw lumpy one-off profits such as from the sale of Temasek Towers,' pointed out Mr Gillespie.

In March last year, CapitaLand sold Temasek Towers for $1.04 billion to fund manager MGP Raffle of the Macquarie Global Property Advisors Group (MGPA), earning some $427 million from the sale. Still, he expects results for CapitaLand to be strong, pointing to its $1.4 billion Raffles City China Fund (RCCF) and its growing fund management business.

And while the interim results for marine and energy players like Keppel Corp and SembMarine are generally expected to live up to expectations, one analyst that BT spoke to is doubtful that it will remain that way.

We're 'lowering our expectations for the next two quarters', he said, adding that order flows could slow down as a result of volatile oil prices.

However, senior vice- president for research at DMG & Partners Securities, Terence Wong, had a contrary view, saying that companies like SembMarine, which have been announcing a slew of fresh deals, should remain fairly steady throughout the year.

While the earnings of big companies appear relatively resilient, it is less sanguine for smaller firms. Already, several small firms have issued profit warnings ahead of the results season, warning shareholders to brace for pain as the US dollar sinks along with a slowdown in the US economy, while the prices of raw materials soar.

For these firms, the weak US currency hits earnings by raising the US-dollar price of their products, which may affect overseas sales, as well as lowering overseas revenue when it is translated into Singapore dollars.