Singapore’s three major banks—DBS, OCBC, and UOB—have reported a rise in net income for the financial year 2024, with increases ranging from 6% to 12% year-on-year, largely driven by robust non-interest income growth, according to CreditSights report.
However, the fourth quarter results were weaker compared to the third quarter, attributed to seasonal factors and a high base effect from a surge in trading income.
Net interest margins (NIMs) fell by 2 to 8 basis points year-on-year in FY24. Whilst DBS and UOB expect only slight declines in NIMs for FY25, OCBC anticipates a potential 20 basis point drop, partly due to its more dovish outlook on interest rates. Loan growth was modest, with DBS, UOB, and OCBC reporting increases of 3%, 5%, and 7%, respectively. Looking ahead, DBS and OCBC foresee mid-single-digit loan growth for FY25, whereas UOB is more optimistic with a high-single-digit growth outlook.
Net fee income saw a significant rise, particularly at DBS with a 23% increase year-on-year, driven by wealth management and credit card fees. Asset quality remained stable, though Hong Kong commercial real estate posed some challenges. Credit costs were stable, with DBS, OCBC, and UOB reporting low figures of 14, 19, and 27 basis points, respectively.
DBS has announced plans to reduce its contract and temporary staff by about 4,000 over the next three years, becoming the first Singaporean bank to integrate AI into its workforce. The banks are also recalibrating their regional strategies, focusing on ASEAN markets, particularly the Johor-Singapore Special Economic Zone, to capture growth opportunities.
The implementation of Basel III reform rules on 1 July 2024 has improved the banks’ CET 1 ratios, with UOB now boasting the highest fully-loaded CET 1 ratio among the three. As the banks navigate these challenges, they remain cautiously optimistic about their prospects in the evolving global landscape.
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