Average NIM contracted slightly from 2023's 2.2% but remained elevated due to higher-for-longer interest rates.

Singapore's three domestic banks—DBS, OCBC, and UOB—recorded net interest margins averaging approximately 2.1% for the full year 2024, landing within the 2.0-2.2% range that S&P Global Ratings had forecast as the peak for the cycle. Moody's data shows the average NIM declined from 2.2% in 2023 to 2.1% in 2024, reflecting gradual margin compression that nevertheless kept net interest income broadly stable due to rebounding loan growth and robust non-interest income.

S&P Forecast and Actual NIM Range

S&P Global Ratings published its outlook in early 2024 projecting that Singapore banks' NIM would peak at 2.0-2.2% during the year, supported by higher-for-longer interest rates that benefited lending spreads. The actual outcome confirmed this forecast. According to Moody's, the system-wide average NIM landed at 2.1% in 2024, while StashAway data compiled from individual bank disclosures yields a three-bank average of approximately 2.12%. The World Bank's Global Financial Development database, which tracks NIM at the country level, corroborates the sustained elevation in margins over the period.

S&P had cautioned in its outlook that while margins would peak, the realities of higher borrowing costs and macroeconomic headwinds would register more prominently in 2024. The rating agency expected nonperforming loan ratios to remain below 2%, a view that was validated over the course of the year.

Moody's Assessment: NIM Decline and Resilience

Moody's assessment of the 2024 results emphasized resilience amid compression. The NIM declined by 10 basis points from 2.2% in 2023 to 2.1% in 2024, but net interest income remained flat year-over-year. This stability was achieved through two channels: a rebound in loan growth that expanded the interest-earning asset base, and strong contributions from fee and trading income that offset the thinning of lending spreads.

"The strength of non-interest income sources, including wealth management, credit card fees, and loan-related charges, helped sustain profitability," Moody's noted in its report on the sector's full-year results. The rating agency further highlighted that full-year net income as a percentage of assets remained largely unchanged across the three banks compared to 2023, with DBS continuing to outperform its peers on this metric.

Looking ahead to 2025, Moody's expects modest further NIM compression as rate cuts remain limited in scope and pace. The agency projects mid- to high-single-digit loan growth, which, combined with robust fee income from wealth management and card businesses, should keep overall profitability broadly stable. Credit costs are expected to remain low, with provisions projected at 20-30 basis points for the year—only a slight uptick from the cyclically low 20-basis-point average recorded in 2024.

Individual Bank NIMs in 2024

Among the three banks, OCBC recorded the highest full-year NIM at 2.20%, followed by DBS at 2.14% and UOB at 2.03%. The three-bank average stood at approximately 2.12%, consistent with the 2.1% average cited by Moody's. OCBC's wider margin reflected a higher proportion of variable-rate loans and a relatively larger contribution from its greater China commercial real estate exposure, which commanded wider spreads but also carried higher credit risk. DBS achieved the flattest NIM trajectory, declining only 6 basis points half-on-half, demonstrating relative stability in its funding mix and loan repricing profile. UOB's NIM of 2.03% placed it at the lower end of the peer group, but the bank maintained stronger loan growth momentum through 2024.

NIM (%) (%)Source: Orionmano Industries

Offsetting Factors: Loan Growth and Fee Income

The banks' ability to maintain stable net interest income despite NIM compression rested on two pillars: a resumption of loan growth and strong expansion in non-interest income. Wealth management fees and trading income grew markedly in 2024, benefiting from elevated market activity and client demand for investment products. Card fees and loan-related charges also contributed to fee income growth, providing a buffer against narrowing lending spreads.

Loan growth rebounded through the year. DBS reported 3% year-on-year loan growth during the first half of 2025, reflecting a trajectory that had been building momentum since late 2024. Moody's expects full-year 2025 loan growth across the sector to land in the mid- to high-single-digit range, supported by corporate lending demand and trade finance activity in the ASEAN region.

On the funding side, the proportion of current account and savings account (CASA) deposits rose to 52% of total deposits, according to Moody's, supporting stable and low-cost funding for the banks. The liquidity coverage ratio across the three banks stood between 140% and 147%, well above regulatory minimums. The Monetary Authority of Singapore's 2024 Financial Stability Review confirmed that non-bank deposits accounted for more than 80% of total banking system funding, with the aggregate common equity tier 1 capital adequacy ratio standing at 16.7% as of Q3 2024—significantly above regulatory requirements. These strong liquidity and capital buffers position the banks to absorb potential asset quality deterioration from commercial real estate exposures, particularly in Greater China, while maintaining capacity to support credit growth in the broader economy.