"Singapore Banks: A Beacon of Stability in a Sea of Uncertainty"

In the ever-shifting landscape of global finance, Singapore's banking sector stands as a bastion of stability and resilience. As the world grapples with economic volatility and geopolitical tensions, the Lion City's banks have not only weathered the storm but have also emerged stronger, with stable credit costs and resilient earnings. This is not just a testament to their financial acumen but also a reflection of their strategic foresight and ethical governance.

The recent report by RHB underscores this stability, highlighting that Singapore banks have had a strong start to the year, outperforming their ASEAN peers. The sector's defensive nature and attractive dividend yields have continued to attract investors, even as other markets falter. This is not a fleeting trend but a result of a well-crafted strategy that prioritizes long-term sustainability over short-term gains.



The 4Q24 results were in line with expectations, with weaker sequential earnings largely due to seasonality and an elevated non-interest income (Non-II) base from 3Q24. Despite a 16% QoQ drop in profit before tax (PIOP), profit after tax and minority interest (PATMI) still grew 8% YoY. This resilience is a stark contrast to the volatility seen in other markets, where banks have struggled to maintain profitability in the face of economic headwinds.

The stability of Singapore banks is further bolstered by their capital return plans. DBS, UOB, and OCBC have unveiled ambitious plans to return $8b, $3b, and $2.5b respectively over the next 2-3 years via a mix of dividends and share buybacks. This not only reinforces investor confidence but also underscores the banks' commitment to returning value to shareholders. It's a stark reminder that in a world where corporate greed often trumps ethical governance, Singapore's banks are leading by example.

Looking ahead, Moody’s forecasts mid- to high-single-digit loan growth for 2025, supported by robust fee income and limited rate cuts. This growth is not just a boon for the banks' bottom line but also a testament to their ability to navigate a challenging economic landscape. The strength of non-interest income sources, including wealth management, credit card fees, and loan-related charges, has helped sustain profitability even as lending margins narrow.

However, the road ahead is not without its challenges. Property-related risks in Greater China could pose significant hurdles, with real estate loans accounting for 26-29% of total gross loans. The banks' ability to manage these risks will be crucial in sustaining their growth trajectory. But given their track record, there's reason to believe that they are well-equipped to handle these challenges.

In conclusion, Singapore's banks are not just weathering the storm but are also setting a new standard for stability and resilience in the global banking sector. Their commitment to ethical governance, strategic foresight, and long-term sustainability is a beacon of hope in a world where corporate greed often trumps ethical considerations. As we look to the future, it's clear that Singapore's banks are not just leading the way but are also paving the path for a more stable and resilient global financial system.