Singapore banks’ interest margins narrow in Q2, but DBS edges ahead
Analysts say DBS’ stronger showing was helped by interest rate hedges and growth in trading and fee income
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[SINGAPORE] Singapore’s three local banks suffered compressed net interest margins (NIMs) in the second quarter of FY2025, as falling benchmark rates weighed on lending yields across the region.
The squeeze on margins – largely driven by declines in the Singapore Overnight Rate Average (Sora) and the Hong Kong Interbank Offered Rate (Hibor) – is expected to remain a key pressure point in the second half of the year.
In Q2, the three-month compounded Sora fell by 50 basis points (bps), while the one-month Hibor declined by nearly 200 bps to its lowest level since 2022.
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