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In 2024, Singapore's largest banks—DBS Bank, OCBC Bank, and UOB—reported remarkable profits, showcasing their resilience and financial strength. This performance was largely driven by significant growth in fee income, particularly from wealth management services.
Singapore's top banks, DBS, OCBC, and UOB, reported strong 2024 profits driven by growth in fee and trading income, offsetting declines in net interest margins.
Despite a stable performance, asset quality remains under scrutiny, particularly due to significant exposure to commercial real estate in Greater China.
Robust capital levels and strong liquidity positions allow the banks to navigate potential challenges in 2025 while increasing dividend payouts and share buybacks.
With increased demand for wealth management products, the banks capitalised on this trend, leading to strong non-interest income. In addition, higher trading income helped counterbalance a slight decline in net interest margins (NIM). While NIM narrowed from 2.2% in 2023 to 2.1% in 2024, stable loan growth offset this drop, keeping overall profitability intact. This solid performance places the banks in a strong position to face potential challenges in 2025, including geopolitical tensions and sector-specific risks.
Asset quality and credit risks
While the healthy profitability is impressive, asset quality is still a concern for Singapore's big three banks. DBS and UOB maintained their nonperforming loan (NPL) ratio at 1.1% and 1.5%, respectively, while OCBC slightly improved its NPL ratio to 0.9% from 1.0% last year. Credit risks are still a cause for worry, especially in Greater China's property market, where the banks have large exposures. The mainland China and Hong Kong commercial real estate (CRE) sector continues to be a priority area. Although the banks have been resilient, with good asset quality and robust provisioning coverage, there is a possibility of a marginal increase in NPLs in 2025 because of the continued stress in the real estate sector. However, the banks have sufficient loan loss reserves to manage these risks.
Strong capital and liquidity position
The capital strength of DBS, OCBC, and UOB continues to be a significant positive factor. The banks reported robust common equity tier 1 (CET1) ratios ranging from 15.1% to 15.4% in 2024, which were supported by strong profits and Basel III regulations. These healthy capital levels have enabled the banks to announce higher capital distributions, such as special dividends and share buybacks. On the liquidity front, all three banks showed impressive performance with high current and savings account (CASA) ratios and strong all-currency liquidity coverage ratios. These factors position the banks well to navigate any macroeconomic challenges in the year ahead.