Photo by Moja Msanii from Unsplash

SG incumbent banks unlikely to take hit from neobanks' deposit cap raise: Fitch

Digital banks could face challenges beyond funding.

The recent increase in deposit caps for Singapore's digital start-up banks is less likely to impact the profitability of the country's dominant incumbent banks, Fitch Ratings reported.

Despite this increase, the size of digital bank deposits remains small compared to the three largest local banks, DBS Group Holdings, Oversea-Chinese Banking Corporation, and United Overseas Bank, which account for 65% of all Singapore-dollar deposits. 

These dominant banks have over S$500b of deposits, far surpassing the capped S$100m of GXS Bank and MariBank.

“The three also maintain a significant liquidity surplus with central banks that bears low liquidity risk and can be readily deployed if needed to support asset growth as opportunities arise,” Fitch Ratings said in the report.

The dominant banks have abundant liquidity and strong deposit inflows, reducing the pressure to compete for deposits and supporting higher net interest margins (NIMs) and profitability. 

Fitch expects these banks to sustain healthy profitability in 2024, even as global interest rates decline and NIMs recede.

ALSO READ: Singapore banks foster growth, boost employee well-being

Recently, GXS and MariBank – two digital full bank license holders – have raised their individual savings account cap to S$75,000, indicating that the S$50m cap on aggregate deposits for each digital bank may have been lifted by regulators.

While digital banks may see a substantial rise in their deposit holdings, as observed with Trust Bank, Fitch believes it won't significantly impact competition dynamics in the next few years. The higher savings account caps align with Singapore's existing deposit insurance limit, offering depositors protection.

However, Fitch points out that digital banks could face challenges beyond funding.

“These include attaining sufficient scale to achieve profitability, gaining access to bankable customers and asset origination opportunities, and developing a range of products that are priced competitively after adjustment for the relevant credit risks.” Fitch added.

The dominant banks' large loan books outside Singapore indicate limited earnings prospects in the small and saturated domestic market.

Follow the links for more news on

Join Asian Banking & Finance community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!


Bank DBS Indonesia avails fast, reliable and sustainable corporate banking
Its ESG-based bank financing, as reflected in sales and asset under management, proves to be an IDR1.8t (US$117m) success.
Italy brings its strong suits to Singapore’s fintech expo
Italian trade executive says 9 firms at the Singapore Fintech Festival 2023 exemplify the diverse range of products and expertise Italy can bring to the table.
Digibank by DBS sets new digital banking standards
Apart from speed and convenience, DBS stays ahead with exceptional personalisation, open banking, and enhanced security.