Higher rates inflict pain on borrowers but economy, not just banks, benefits

THE three Singapore banks listed on the local bourse are basking in a period of favourable interest rate movements, drawing positive reactions from the market. Borrowers may be a little less happy, but those offended by the banks’ healthy margins should also consider that strong banks help support a strong economy.

For Q3 2022, DBS posted a 32 per cent increase in net profit to S$2.24 billion. Net profit at OCBC rose 31 per cent to S$1.61 billion. And UOB posted a 34 per cent gain in net profit, to S$1.4 billion.

Contributing to profit growth were improving net interest margins (NIMs). On a quarter-on-quarter basis, DBS’ Q3 NIM rose 32 basis points to 1.9 per cent. OCBC’s was up 35 basis points to 2.06 per cent, and UOB’s up 28 basis points to 1.95 per cent. Year on year, their NIMs have risen by between 40 and 54 basis points.