Singapore's three local banks saw divergent loan growth in 1H2025, with OCBC at 9% and DBS at 3%, while aggregate job cuts reached 3,000.

First-half 2025 results reveal a clear split in loan growth momentum among Singapore's three major banks, with OCBC surging 9% while DBS lagged at 3%, even as all three faced margin pressure and rising costs. The divergence underscores a market where strategic positioning in mortgages, corporate lending, and regional exposure is increasingly determining relative performance, even as the sector collectively contends with net interest margin compression and the structural costs of digital transformation.

Loan Growth Divergence Among Singapore's Big Three

OCBC delivered the strongest loan expansion among the three local banks in 1H2025, with customer loans growing 9.0% year-on-year. The growth was fuelled by residential mortgages and corporate lending across key industries including transport and communications, reflecting the bank's deliberate push into segments with sustained demand. UOB followed with 4.0% growth, supported by robust regional lending activity across ASEAN markets where its expanded franchise—bolstered by the Citi consumer business integration—continues to generate traction. DBS registered a more modest 3.0% increase in customer loans, signalling a cautious approach to loan book expansion amid a measured economic outlook and selective underwriting standards.

Loan Growth (%) (%)Source: Orionmano Industries

The three banks collectively command a dominant share of domestic credit intermediation, with loans to residents rising 6.1% over the period. OCBC's outsized growth relative to this aggregate figure suggests it is capturing market share, while DBS's below-average expansion reflects a more conservative posture that prioritises asset quality over volume.

Revenue and Profit Performance: DBS Leads, OCBC Slips

Top-line performance diverged sharply from loan growth trends. DBS posted the strongest revenue momentum, with total income rising 5.0% year-on-year, driven by robust wealth management activity, treasury customer sales, and sustained fee income from card spending. UOB reported 2.0% income growth, while OCBC's total income contracted by -1.0%, reflecting slower momentum across both net interest and non-interest segments.

On profit before allowances, DBS again led with a 5.0% gain, ahead of UOB at 3.4%. OCBC slipped by -3.0% as rising operating expenses offset topline gains. The divergence deepened at the bottom line: UOB grew net profit 3.0%, DBS managed 1.0% growth—partly constrained by the implementation of a new global minimum tax—while OCBC saw net profit decline -5.0%, pulled down by higher cost growth and investment spending.

The results highlight how macroeconomic headwinds, tax policy changes, and cost discipline are increasingly shaping bottom-line outcomes. OCBC's higher investment spending—likely tied to digital infrastructure and regional expansion—weighed on near-term profitability even as its loan book expanded fastest. DBS, by contrast, managed to deliver revenue and profit growth despite slower loan expansion, reflecting a higher proportion of fee-based income and tighter cost management.

Cost Rationalisation and Job Reductions

Collectively, DBS, OCBC, and UOB shed nearly 3,000 jobs in 2025 as part of a restructuring and productivity push. The reductions reflect a global trend toward digitisation and cost efficiency in banking, as institutions rationalise branch networks, automate processes, and redirect resources toward technology and data analytics. Singapore's banking sector, as a financial hub, mirrors pressures seen across major markets including Europe and North America, where headcount reductions have become a recurring feature of earnings seasons.

The cuts are not solely about cost reduction; they signal a strategic reallocation of labour toward higher-value functions. DBS, which has invested heavily in technology platforms and digital customer acquisition, continues to emphasise efficiency ratios. OCBC's higher cost base in 1H2025—which contributed to its profit decline—suggests the bank is in an investment cycle that may pressure returns in the near term while positioning for longer-term gains. UOB, having completed its Citi integration, is now focused on extracting cost synergies and standardising regional operations.

Market Rally and Dividend Appeal

Despite the mixed earnings picture, the three banks have been the principal drivers of a historic rally in the Straits Times Index (STI), which climbed to a record high of 4,765.29 points on 7 January 2026. Since early 2025, DBS and OCBC posted cumulative price gains of more than 30% and 19% respectively over the preceding twelve months, with UOB also contributing materially to index performance.

Investor enthusiasm has been sustained by robust capital buffers, high dividend yields, and superior interest-rate risk management relative to regional peers. DBS, the benchmark performer, has delivered particularly strong total returns through a combination of price appreciation and attractive cash-flow yields. OCBC's growth trajectory remains promising but tempered by modest hedging. UOB, while offering a relative valuation discount, faces headwinds from earnings volatility and weaker risk mitigants.

The divergence in loan growth and cost discipline among Singapore's top banks will likely persist as the sector navigates margin compression and digital transformation, with DBS, OCBC, and UOB continuing to anchor the STI's performance in 2026. For investors, the key question is whether OCBC's loan-led growth strategy will convert into superior earnings over the medium term, or whether DBS's more conservative approach and fee-income orientation will continue to deliver more consistent returns. UOB's regional diversification and cost synergies may offer a middle path, but near-term pressures on NIM—projected at 1.85% to 1.9% for FY2025—remain a headwind.