Growth in Singapore financial services in 2023 was driven by banking and insurance segments, supported by sustained credit intermediation under accommodative financial conditions and robust performance in life insurance.

Sector Performance and Composition

Singapore’s finance and insurance sector expanded by 7.3% in 2024, moderating from a higher trajectory in prior years as the economy recalibrated post-pandemic (Source 2). The 2023 performance was bifurcated: banking and insurance served as primary growth engines, while the fund management segment experienced more subdued activity amid weaker global market conditions (Source 2). The financial sector’s contribution to Singapore’s GDP remained substantial, with banking alone accounting for approximately 20% of national output (Source 6).

Banking Segment: Credit Intermediation and Interest Rate Dynamics

Bank credit intermediation was a central growth pillar in 2023, supported by accommodative financial conditions that MAS maintained through a 0% Countercyclical Capital Buffer (CCyB) for 2024 (Source 3). However, the sector faced headwinds from elevated interest rates: net interest margins (NIMs) for Singapore banks peaked in October 2022, and earnings growth moderated as a result (Source 6). The high-rate environment suppressed loan demand through mid-2023. As of Q3 2023, bank credit intermediation continued to contract, with companies drawing down cash buffers and deferring borrowing plans (Source 5). By early 2024, MAS projected that fee incomes would see an uptick as interest rates moderated, with increased rotation into bond and equity funds from short-term cash equivalent assets (Source 5).

The three major domestic banks—DBS, OCBC, and UOB—maintained strong balance sheets with non-performing loan ratios among the lowest in Asia-Pacific. Loan-to-deposit ratios averaged 87% across the three banks in 2022, compared to the APAC average of approximately 85.8% (Source 6). Cost efficiency ratios of ~43% positioned Singapore banks favorably against regional peers (Source 6). Fee income patterns diverged: DBS saw card fees grow 20% year-on-year to USD 644 million in 2022, partially offsetting steep declines in wealth management (-25.5%) and investment banking (-44.5%) fees (Source 6).

Insurance Segment: Life Insurance and Market Dynamics

The life insurance segment posted robust performance in 2023, supporting overall sector growth. However, industry surveys indicate that insurance risks are intensifying: PwC’s 2023 Insurance Banana Skins report shows Singapore’s risk perception index rose to 3.59 in 2023 from 3.37 in 2021 (on a 1–5 scale), outpacing the global average increase from 3.19 to 3.21 over the same period (Source 7). The preparedness index improved modestly from 3.10 to 3.20 (Source 7).

Human talent has leapfrogged to become the top risk for Singapore insurers, driven by growing regulatory scrutiny (IFRS 17, climate disclosures), operational sophistication demands, and digital disruption (Source 7). Cyber risk remains among the top three concerns across Singapore, Asia-Pacific, and global markets (Source 7). Market saturation in Singapore is pushing insurers to seek growth through new channels, products, and geographic expansion into underserved Asian markets where insurance gaps remain high (Source 7).

Fund Management and Capital Inflows

The fund management segment saw more subdued activity in 2023, reflecting weaker global market conditions (Source 2). Singapore’s position as a leading wealth management centre continued to draw significant capital inflows from high-net-worth individuals, supported by strong institutional infrastructure and the jurisdiction’s reputation as a safe financial centre (Source 2). These capital inflows fuel activity across the banking, wealth management, insurance, and payments ecosystem (Source 2).

The Monetary Authority of Singapore reported that assets under management (AUM) in Singapore crossed SGD 6 trillion for the first time in 2024, growing 12.2% year-on-year (Source 4). Net inflows into Singapore grew 50% in 2024 from 2023, as fund-raising activities recovered amid improving investment sentiment (Source 4). The number of fund management companies reached 1,298 by end-2024 (Source 4).

Regulatory and Macroeconomic Context

MAS maintained the CCyB at 0% for 2024, reflecting the resident credit-to-GDP gap remaining negative through Q3 2023 (Source 3). The economy’s overall resident credit-to-GDP ratio declined from 153% in Q3 2022 to 147% in Q3 2023, driven by nominal GDP growth and a decline in resident credit volumes (Source 3). Financial sector balance sheets remained strong: banks maintained robust capital and liquidity positions, insurers remained well-capitalised, and investment funds met redemption demands amid market volatility (Source 3). MAS imposed SGD 27.45 million in composition penalties against nine financial institutions—including Credit Suisse, UOB, UBS, Citi, and Julius Baer—for anti-money laundering breaches linked to a SGD 3 billion money laundering scandal in 2023 (Source 4).

Outlook

MAS projects that the finance and insurance sector will remain supported by broadly accommodative financial conditions, with steady growth expected from digital financial services, wealth management, and the payments industry anchored by travel recovery (Sources 2, 5). Low interest rates may pressure banks’ net interest margins, but this is expected to be offset in part by stronger loan demand and continued momentum in wealth-related and digital services (Source 2). Key risks include global financial tightening, trade conflict escalation, geopolitical tensions, and persistent elevated policy uncertainty (Source 4). MAS has applied more severe scenarios—including sharp tightening in global financial conditions, trade shocks, and heightened market volatility—in its 2025 financial system stress tests (Source 4).

Percentage (%) (%)Source: Orionmano Industries