Dividend appeal of Singapore banks remains compelling

SINGAPORE’S three largest banks – DBS, UOB and OCBC – rallied strongly in 2024. Even though the US Federal Reserve started cutting interest rates in September, the banks had already taken proactive measures to cushion any impact on their earnings.

Their share prices rose broadly, thanks to the full-year results released last month and greater certainty on their capital management plans to reward shareholders.

The outlook for the banking sector is further supported by US President Donald Trump’s policies, which are expected to keep inflation elevated and slow the pace of the Fed’s interest rate cuts. Higher interest rates (compared to pre-pandemic levels) help to support banks’ net interest margins (NIM).