All three of Singapore’s local banking giants registered record profits in 2022 as higher interest rates benefited the Southeast Asia-oriented lenders. 

2022 was a challenging year for the financial sector, characterized by negative market performance across asset classes and a dealmaking slump. Nonetheless, Singapore’s so-called «big three» banks – DBS, OCBC and UOB – managed to buck the trend to deliver a hat-trick in profits.

Higher interest rates acted as the proverbial rising tide to lift all boats. Local and regional economic resilience offset credit troubles elsewhere. Digital business featured highly. 

finews.asia takes a deeper dive into the record results of the Singapore trio. 

Interest Income Surge

Net interest income surged at DBS (40 percent increase), OCBC (31 percent) and UOB (31 percent) as continued economic momentum in the region coupled with higher rates drove loan revenues higher. 

This was the primary contributor to record profits as all three lenders were not immune to the broader market woes that drove non-interest income, like fees and commissions, lower.

Asia Diversity

One of the major advantages often being touted in Asia is its economic diversity and how this allows for regional resilience in different scenarios. This was in play in 2022 as various markets played a role in the bottom lines of the big three banks. 

The Singapore home market was the key profit contributor for all in 2022. At OCBC, net profits climbed 44 percent to S$1.2 billion ($890 million) in Malaysia where it fully acquired Horizon Asset Management in 2021 and launched private banking services in 2022. DBS saw profits in its Hong Kong unit grow more than 21 percent to over S$1.4 billion.

China: Risk and Reward

While all three banks saw improved profits in Greater China, they were also hit by economic challenges in the mainland which was a sore point for many balance sheets worldwide. For example, Asia-focused British lenders HSBC and Standard Chartered both saw significantly higher credit impairment charges that were, in part, attributed to China’s commercial real estate sector.

UOB saw a 78 percent increase to S$100 million in loan-related allowances for Greater China. At DBS, stage 3 expected credit losses from Greater China ex-Hong Kong markets increased 139 percent to S$148 million.

All non-performing loan ratios also stayed flat or improved.

Digital Business

Another shared feature was highlights related to digitalization and its business contributions.

At OCBC, for example, the bank registered strong growth in digital wealth sales while nearly all customer transactions in Singapore are now conducted digitally. DBS’s crypto exchange business saw increased trading and its customer base doubled in 2022 with expectations for an additional 60-70 percent revenue boost in 2023.