Singapore’s biggest banks are bracing for macroeconomic uncertainty following mixed quarterly results.
DBS, Southeast Asia’s largest bank, delivered a good quarter. On Thursday, the bank reported profits of 2.82 billion Singapore dollars ($2.2 billion) for the quarter ended June 2025, a 1% increase year on year that beat consensus estimates. Robust lending and wealth management fees drove DBS’s total income up by 5% year on year, hitting 5.8 billion Singapore dollars ($4.47 billion).
Yet fellow Singaporean bank UOB, which released its quarterly results on the same day, reported a 6% drop in quarterly profit to 1.34 billion Singapore dollars ($1.04 billion) as net interest income weakened.
OCBC, which reported last week, also had its quarterly profit decline by 6% to 2.34 billion Singapore dollars ($1.82 billion). As with UOB, falling net interest income weighed on OCBC’s performance.
The three banks, the largest by revenue in Southeast Asia, are not only grappling with declining interest rates, but also warning of a more uncertain economic outlook.
In a statement, UOB CEO Wee Ee Cheong expressed confidence in Southeast Asia’s long-term prospects despite global polarization. UOB has the greatest exposure to Southeast Asia among the three major Singaporean banks.
“As the global landscape transitions towards a multipolar world order, ASEAN continues to demonstrate resilient growth. With regional integration, trade diversification, and rising foreign direct investments, ASEAN is well-positioned to thrive in the evolving global economy,” Wee said in the statement.
Yet UOB’s CEO also warned that new U.S. tariffs could dampen consumer sentiment and investment activity.
Outgoing OCBC CEO Helen Wong also highlighted a challenging macroeconomic outlook in her earnings statement last week. “Evolving trade and monetary policies and persistent geopolitical tensions are expected to weigh on growth prospects,” she said.
Tan Su Shan of DBS, speaking after her first full quarter as the bank’s new CEO, acknowledged “external uncertainties,” though added that “proactive management” of the balance sheet will help DBS navigate the interest rate cycle.
Tariffs and interest rates
The interest rate hikes that began in 2021 are now easing. The U.S. Federal Reserve cut rates by a percentage point over the second half of 2024, and could cut rates further following weak employment growth in the U.S.
The European Union and China started to ease their monetary policies last year as well. The Monetary Authority of Singapore, the city-state’s de facto central bank, also loosened its monetary policy earlier this year.
Banks profit from higher interest rates by earning more on loans and attracting additional deposits.
Beyond falling interest rates, Singapore’s three banks must also navigate higher U.S. tariffs. Trump’s new tariffs on U.S. trading partners go into effect today. Singapore escaped the flood of new taxes, with its exports just getting the baseline 10% tariff on all U.S.-bound exports.
Yet Singapore’s neighbors are more deeply affected: Southeast Asian economies like Thailand, Indonesia, and Vietnam received tariffs of around 19% to 20%.
Other Asian economies will feel the impacts even more. China, a major market for both DBS and OCBC, now faces a combined U.S. tariff of 55%, though some of those taxes are paused to allow for trade negotiations. India, another target market for DBS, faces a steep tariff of 50%.
While tariffs won’t directly affect DBS, UOB, or OCBC, a broader tariff-driven economic slowdown will dampen consumer sentiment and curb investment activity, reducing business opportunities for Singapore’s globally connected banking sector.
