Singapore banks face tough times amid slowing global growth and lower margins, but analysts say their recent acquisitions will give them a leg up.
High interest rates over recent years have proved a bonanza for DBS, OCBC and UOB, but those heady days are drawing to a close with the United States seemingly ready to start cutting in 2024.
The local banks' core earnings grew between 2 per cent and 12 per cent in the last quarter of 2023 despite seasonally lower business during the year-end festive period.
These earnings exclude one-off costs incurred by UOB for integrating Citigroup's consumer units in Asean, and DBS' outlays for integrating Citibank Taiwan and committing funds to DBS Foundation and other charitable causes.
Mr Thilan Wickramasinghe, Singapore research head and regional financials head at Maybank Investment Banking Group, told The Straits Times that the sector had a strong finish to 2023, with all three banks posting record profits despite a gloomy global environment.
"There was a big dependence on interest income to drive earnings, while non-interest income is still soft due to weak wealth management. Asset quality turned out to be a pleasant surprise in as much as NPLS non-performing loans were largely falling despite high interest rates and slower macro growth," he added.
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