“Continued liquidity inflows through deposits have supported resilient NII, which declined 0.9% - 3.2% q-o-q against a 2 basis point (bps) - 10 bps decline in NIMs (net interest margins), observed across Singapore banks in 1Q2026 due to the deployment of excess liquidity into NII-accretive and NIM-dilutive HQLA,” write Tay and Tan in their June 9 report. HQLA refers to high-quality liquid assets, which can be easily converted into cash at little or no loss of value.
CGS International’s (CGSI) Tay Wee Kuang and Tan Jie Hui have upgraded the Singapore banking sector to “overweight” from “neutral” previously as they see earnings upside from potentially stronger net interest income (NII) in FY2027.
The growth comes from continuous capital inflows after data from the Monetary Authority of Singapore (MAS) saw April deposits up by 7.3% y-o-y and 0.21% m-o-m.
