State of Singapore Banks 2023: Fighting declining non-interest incomes in times of record profits

Summary

Singapore's banks are earning record profits even as a key revenue stream quietly erodes. The city-state's banking sector, which contributes roughly a fifth of national GDP, is navigating a slowdown in non-interest income from wealth management and investment banking fees just as net interest margins reach a decade-long peak.

Affluent clients are increasingly managing their own wealth or routing it through private advisors rather than bank platforms, with consequences for fee income across the sector's major players. These headwinds sit against a backdrop of slowing GDP growth and easing inflation expectations for the year, while loan books, deposit bases and non-performing loan ratios hold up by comparison with regional peers.

Beyond the numbers, Singapore's banks are making technology and innovation bets to defend margins and build new revenue lines, from programmable digital currency pilots and dedicated innovation districts to open-source platform adoption for AI and data science. Technology spending intensity across the sector varies, comparing how efficiently different banks convert ICT investment into cost advantage.

• Covers DBS, UOB and OCBC technology and innovation initiatives
• Benchmarks ICT spend-to-revenue ratios and cost efficiency across Singapore banks

Can Singapore's banks offset declining fee income by turning technology investment into a durable cost and growth advantage?