Singapore's leading banks are increasing their deposits, particularly those with longer maturities
To prepare for anticipated lower interest rates, Singapore’s leading banks are increasing their deposits, particularly those with longer maturities.
DBS, led by outgoing CEO Piyush Gupta, forecasts net profit growth for 2024 in the “mid- to high-single-digit” range, with total income expected to grow similarly. He noted that a significant portion of their current account savings account balances had been shifted into fixed deposits, making them less sensitive to falling interest rates.
Thilan Wickramasinghe, head of research at Maybank Securities Singapore, told S&P Global Marketing Intelligence in an email that they are “OCBC CEO Helen Wong expects the bank’s net interest margin to drop between 2.2% and 2.25%. To mitigate the impact of lower interest rates, OCBC has begun investing in high-quality bonds.
Mr Wickramasinghe pointed out that the banks have been extending the duration of their asset yields to provide some protection when interest rates fall. However, this hedging strategy only applies to a small portion of their portfolios, meaning that NIM compression will likely continue.
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