Fee income cushions banks amidst NIM squeeze

Singapore’s top banks saw NIMs dip 12 to 29 basis points YoY.

Singapore’s top banks closed the 2025 financial year under pressure from falling net interest margins (NIMs) but found a buffer in rising fee income.

DBS, OCBC, and UOB all saw NIMs dip 12 to 29 basis points year-on-year, even as stabilising Singapore Overnight Rate Average (SORA) rates and strong current account and savings account (CASA) deposits provided some support, CreditSights reported.

Meanwhile, wealth management-related fees lifted net non-interest income 7 to 22% YoY, with OCBC leading the trio thanks to robust advisory services and expansion of assets under management (AUM). DBS and UOB saw trading income normalise, partially offsetting gains from fees.

UOB’s provisions surged 121%, driven by commercial real estate (CRE) exposure in Greater China and the US, while OCBC’s fell modestly. Loan growth remained moderate, 4–9% YoY, led by Singapore-based and trade loans.

A separate report by UOBKH in January said that banks are expected to report stable financial performance for the fourth quarter of 2025 (Q4 2025) due to factors such as stabilising profit margins and steady investment fee income.

Looking ahead, analysts expect NIMs to stay under mild pressure in 2026, but fee income is set to remain a key stabiliser as banks navigate muted loan growth and mixed credit costs.

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