Singapore banks had a Goldilocks year in 2023, but 2024 not likely to be as benign amid tepid loan growth

SINGAPORE banks are unlikely to replicate the tremendous year they had in 2023, which saw them report record earnings thanks to Goldilocks conditions. Higher interest rates boosted their interest incomes immediately even as their cost of funds took a while to catch up.

Analysts said the local banking trio is likely to experience limited earnings growth and greater cost pressures. Loan growth will remain tepid as consumers and businesses decline to borrow or refinance at the current high rates.

The three local banks posted record net profits in FY2022: DBS reported S$8.2 billion in net profit, OCBC ’s was S$5.8 billion, and UOB ’s was S$4.8 billion.