Singapore’s three biggest banks, United Overseas Bank, DBS Bank and Oversea-Chinese Banking Corporation (OCBC), continue to report growth and profitability as they benefit from an environment of higher interest rates.
In October, Singapore’s central bank tightened monetary policy in October for the fifth time in 12 months.
In early November, south-east Asia’s second-largest lender, OCBC, beat market estimates with record quarterly profits. The bank’s net profit increased to S$1.6bn ($1.13bn) between July and September rather than the S$1.55bn average estimated by some analysts.
DBS Bank reported that its net profit climbed 32% from a year ago to a record S$2.24bn Singapore dollars for the three months from July to September.
At the end of 2021, all three saw a big jump in pre-tax profits compared with 2020. United Overseas Bank’s rose from $2.68bn to $3.66bn, and DBS Bank’s from $4.07bn to $5.76bn.
All three are expected to continue delivering double-digit profit growth in 2023, according to ratings agency Fitch. However, asset quality will deteriorate as worsening economic conditions lead to increasing defaults, according to Moody’s. Despite the positive results, risks would materialise if growth dives significantly as a result of inflation biting harder across the region.
