Half-year data from public sources shows DBS and OCBC CIR rose in 2H 2024, while UOB held steady near 43%. The average aligns with an AI summary.

Singapore’s three largest banks—DBS, OCBC, and UOB—averaged a cost-to-income ratio (CIR) of 44.6% in 2024, according to aggregated industry data. While first-half CIR figures across the three lenders dipped to a simple average of approximately 41.1%, the full-year average signals that the sector maintained tight operational control over costs even as revenue dynamics shifted across the year. This operational efficiency, combined with sustained profitability and robust capital levels, positions the trio to navigate the expected gradual decline in interest rates in 2025.

Cost-to-Income Ratio: Half-Year Trends and Full-Year Average

The headline 44.6% average CIR for the three banks in 2024 (Source 1) warrants closer examination against semi-annual data from public filings. According to source data compiled by StashAway (Source 7), individual bank CIRs moved in divergent directions between the first and second halves of the year.

DBS reported a CIR of 38.5% in 1H 2024, which rose to 41.3% in 2H 2024. OCBC saw a sharper increase, climbing from 37.5% in the first half to 41.9% in the second half. UOB bucked the trend, improving from 44.4% in 1H 2024 to 43.1% in 2H 2024.

The simple average of the first-half CIRs stands at 39.9% for DBS, 39.7% for OCBC, and 43.75% for UOB, yielding a three-bank mean of approximately 41.1%. This is notably lower than the 44.6% full-year figure, suggesting the latter may reflect a weighted or differently calculated metric—possibly incorporating full-year income and cost totals rather than averaging half-year ratios.

Cost-to-Income Ratio (%) (%)Source: Orionmano Industries

Despite the half-year variation, the full-year average remains within a historically tight band for Singapore’s banking sector, reflecting sustained discipline in expense management even as income streams diversified. The second-half uptick at DBS and OCBC likely reflects rising investment in technology and talent, consistent with their digital transformation agendas.

Profitability Drivers: Fee Income and Wealth Management

The three banks posted record or near-record profits in 2024, powered overwhelmingly by surging non-interest income that offset compression in net interest margins (NIM). DBS reported total income of S$22.3 billion for 2024, with net profit rising 11% to a record S$11.41 billion (Source 3). OCBC’s net profit grew 8% to a record S$7.59 billion (Source 5), while UOB’s net profit rose 5.8% to S$6.045 billion (Source 5).

Fee income was the standout driver. OCBC’s non-interest income surged 16% to S$5.5 billion in 2024, with wealth fees jumping 34% (Source 4). DBS reported a 45% year-on-year increase in wealth-management fee income, supported by over 1,500 AI models deployed across 370 use cases that generated actionable customer insights (Source 3). UOB also saw double-digit fee growth, which helped offset a soft patch in NIM and trading income in the first half (Source 3).

The shift toward fee-based revenue is structurally important. As interest rates begin a gradual descent in 2025—widely anticipated to compress NIMs further—the banks’ ability to generate income from wealth management, cards, treasury services, and insurance will be critical. OCBC’s wealth management now contributes 38% of its total income (Source 4), while the group’s insurance business from Great Eastern Holdings grew 17% to S$1.1 billion. This diversification reduces reliance on net interest income and provides a buffer against rate normalisation.

Capital Strength and Shareholder Returns

All three banks maintain capital levels well above regulatory minima. As of December 2024, the average Basel III fully phased-in common equity tier 1 (CET1) ratio across the three banks stood at 15.3%, up from 14.6% a year earlier (Source 2). This increase was driven by strong retained earnings and the capital-positive impact of finalised Basel III rules in Singapore.

Shareholders are the primary beneficiaries of this capital strength. DBS raised its quarterly ordinary dividend to 60 cents and introduced an additional capital-return dividend of 15 cents per quarter for the 2025–2027 period, alongside a S$3 billion share buyback programme launched in November 2024 (Source 3). OCBC declared total dividends of S$0.99 per share for FY2025, representing a 60% payout ratio, and outlined a S$2.5 billion capital return plan targeted for completion by 2026 (Source 4). UOB announced a S$3 billion capital return package, including a special dividend of 50 cents per share and a S$2 billion share buyback plan (Source 5).

Moody’s Ratings, in a report redisseminated by The Asian Banker, noted that dividend payouts for DBS and OCBC rose to 55% and 60% of net income, respectively, from 49% and 53% in 2023, while UOB’s payout ratio remained largely stable (Source 2). The rating agency expects capital levels to “decrease moderately from high levels in 2025 because of the higher capital distributions, as well as potential acquisitions.”

Funding and liquidity remain strengths. The banks’ average current and savings account (CASA) ratio improved to 52% of total deposits from 50% in 2023, while all-currency liquidity coverage ratios ranged between 140% and 147%, well above the 100% regulatory minimum (Source 2).

The path ahead is clear. With gradual rate cuts expected in 2025 to pressure net interest margins, Singapore’s big three are well positioned to sustain returns through fee income diversification, cost discipline, and robust capital return programmes. Their ability to pair regional growth with disciplined capital management produced another year of record profits in 2024 and positions them to continue rewarding shareholders in 2025.