Singapore banks see H1 profit ease on margin, tax pressures

The big three’s profitability moderated from peal levels, noted Moody’s Ratings.

Singapore’s three largest banks reported slightly lower profitability in the first half of 2025, compared to the period a year earlier.

However, their balance sheets remained strong and they are well-positioned to weather tariff risks, Moody’s Ratings said in an issuer in-depth report on 11 August 2025.

DBS, OCBC, and UOB’s profitability moderated from peak levels, with return on average assets declining to 1.1%-1.4% in H1 2025, from 1.1%-1.5% a year earlier.

Net interest margin (NIM) compressions were reported by the banks on the back of lower HKD and SGD benchmark rates.

Their credit costs also rose from pre-emptive provisioning, and income taxes rose in tandem with Singapore’s new 15% global minimum corporate tax rate.

The banks estimate that the impact of US tariffs on their loan portfolios to be limited, though second-order effects are hard to assess, Moody’s Ratings reported.

Asset qualities were stable, with nonperforming loan (NPL) and nonperforming asset (NPA) coverage ratios broadly unchanged year on year, it added.

Liquidity coverage ratios (LCRs) and net stable funding ratio (NSFRs) were well above regulatory requirements, Moody’s said.