Singapore banks’ interest margins narrow in Q2, but DBS edges ahead

[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.