Singapore’s leading banks—DBS Group Holdings, Oversea-Chinese Banking Corp, and United Overseas Bank—have reported a slight decline in profitability for the first half of 2025, according to Moody’s. The decrease is attributed to falling benchmark rates, yet the banks maintain robust balance sheets capable of withstanding tariff risks.
Moody’s highlights that the banks’ return on average assets fell to between 1.1% and 1.4% due to compressed net interest margins from lower Hong Kong Dollar and Singapore Dollar rates. However, non-interest income saw significant growth, driven by trading and wealth-related fees. Loan growth accelerated to 4%-9% year over year, primarily through corporate and housing loans in Singapore.
Asset quality remained stable, with non-performing loan coverage ratios largely unchanged. The banks’ exposure to US tariffs is expected to have a limited impact, though the evolving trade policies pose some uncertainty. Their commercial real estate exposure in Greater China is mitigated by focusing on top-tier developers and state-owned enterprises.
Capital ratios remained high, with Common Equity Tier 1 ratios between 15.3% and 17% on a transitional basis. Liquidity also stayed strong, with liquidity coverage ratios and net stable funding ratios well above regulatory requirements. The banks are primarily funded by customer deposits, which increased to 70%-83% of total liabilities.
Despite the dip in profitability, the banks’ strong liquidity and capital positions suggest resilience against potential economic challenges in the latter half of 2025.
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