Singapore's three largest banks maintained common equity tier 1 capital ratios well above regulatory thresholds, enabling generous capital returns.

CET1 Ratios Surge Past 15% in 2024

Singapore's three largest banks—DBS Bank Ltd, Oversea-Chinese Banking Corp Ltd (OCBC), and United Overseas Bank Limited (UOB)—reported an average fully phased-in Common Equity Tier 1 (CET1) capital ratio of 15.3% as of December 2024, more than double the Monetary Authority of Singapore's (MAS) 6.5% minimum requirement. On a transitional basis, the average CET1 ratio stood at 16.5%, according to Moody's Ratings data redisseminated by The Asian Banker. Both figures represent a material increase from the 14.6% average recorded a year earlier, driven largely by record profits and the capital-positive impact of the final Basel III reforms implemented in Singapore from July 2024.

For the third quarter of 2024, the three banks reported closely clustered fully phased-in CET1 ratios: DBS at 15.2%, OCBC at 15.6%, and UOB at 15.2%, per DBS Insights. On a transitional basis—which includes regulatory phase-in provisions—the Q3 2024 figures were more elevated: DBS 17.2%, OCBC 17.2%, and UOB 15.5%. For full-year 2024, StashAway reports transitional CET1 ratios of DBS 17.0%, OCBC 17.1%, and UOB 15.5%.

CET1 Ratio (%)Source: Orionmano Industries

Capital Strength Enables Higher Dividends and Buybacks

The elevated capital buffers have directly fueled aggressive shareholder return programs. DBS increased its dividend payout ratio to 55% of net income in 2024 from 49% in 2023, while OCBC raised its payout to 60% from 53%, according to Moody's. UOB's payout ratio remained broadly stable, though the bank has introduced special dividends.

Beyond ordinary dividends, the banks deployed excess capital through special payouts and buyback programs. DBS announced a SGD3 billion share buyback program to be executed opportunistically over three years. OCBC paid a 16¢ special dividend, and UOB paid a 50¢ special dividend in two tranches during 2025, per StashAway data.

Analyst estimates of total excess capital across the three banks are material. DBS Insights estimates DBS holds SGD3–5 billion in excess capital that can be returned to shareholders, based on management's view of 14% as a comfortable CET1 floor. OCBC has estimated excess capital of approximately SGD2 billion, with management targeting 14% CET1 as comfortable, while UOB's excess capital is estimated at SGD1.3–2.5 billion, with management targeting a 13.5–14.0% CET1 operating range. DBS has additionally committed to increasing its per-share dividend by 24 Singapore cents annually over the medium term.

Regulatory Tailwinds from Final Basel III Reforms

The implementation of MAS's final Basel III reforms, effective from 1 July 2024, provided a significant one-time CET1 ratio uplift of 1.7–2.4 percentage points across the three banks during Q3 2024. This regulatory tailwind substantially widened the already comfortable margins above the MAS minimum CET1 requirement of 6.5%.

The banks' risk-weight density has remained stable. As of Q3 2025, average risk-weight density across the three lenders held at 40%, according to Yahoo Finance Singapore, indicating consistent asset composition despite the regulatory changes. Internal target ranges for CET1 remain conservative: DBS management views 14% as a comfortable level, OCBC targets 14%, and UOB operates within a 13.5–14.0% range—all well above both the regulatory minimum and the systemic buffer requirements.

Funding and liquidity positions are similarly robust. As of December 2024, all three banks reported all-currency liquidity coverage ratios of 140–147%, well above the 100% minimum regulatory requirement. Current and savings account (CASA) deposits averaged 52% of total deposits at end-2024, up from 50% in 2023, reflecting easing outflows to higher-yielding alternatives. Moody's expects a modest improvement in CASA ratios in 2025 supported by higher inflows.

Outlook: Moderation Expected but Ratios Remain Robust

Moody's expects capital levels to decrease moderately in 2025 due to higher capital distributions and potential acquisitions. The Q3 2025 data already shows a slight downward trend: fully phased-in CET1 ratios stood at DBS 15.1%, OCBC 15%, and UOB 14.5% as of Q3 2025, according to Yahoo Finance Singapore and OCBC's FY2025 annual report. On a transitional basis, OCBC reported a CET1 ratio of 16.9% as of December 2025.

Despite the moderation, all three banks maintain ratios well above the 14% threshold. Analysts note that substituting CET1 capital with cheaper subordinated debt—issuing Additional Tier 1 and Tier 2 instruments—could free up equity for further buybacks or higher dividends, particularly as interest rates decline. The banks' capital structures offer room for optimization given sub-optimal AT1 and Tier 2 ratios relative to regulatory ceilings.

Selective risk transfer (SRT) transactions also present a potential capital management tool. As of Q3 2025, with the average fully phased-in CET1 ratio at 15% and asset quality among the strongest in Asia, SRT arrangements could allow further capital optimization by transferring portfolio credit-loss risk to investors when regulatory capital requirements substantially exceed underlying loan risk.

The combined SGD25 billion in net profit reported by the three banks in FY2024—and SGD17.6 billion in the first nine months of 2025—underscores the earnings capacity underpinning these capital levels. Forward dividend yields of approximately 4.6% for DBS, 5.9% for OCBC, and 5.0% for UOB, as reported by StashAway, continue to offer attractive returns relative to low-risk cash instruments, supported by capital buffers that insulate distribution capacity from moderate earnings compression.