All three banks’ net interest income (NII) comprises more than 60% of their total income. The local banks’ investment banking and trading income is comparable to that of some of the largest banks in the US. To a certain extent, banks are likely to have some form of fixed-rate hedges that protect them from too drastic a fall in interest rates.
The backdrop to the local banks’ 3QFY2025 results is likely to be the continued decline in the three-month compounded Singapore Overnight Rate Average (Sora), which fell from 2.06% as of end-June to 1.457% as of Sept 30. Since then, the three-month compounded Sora has dipped to 1.3958% (as of Oct 22). As a counterpoint, the 10-year yield on Singapore government securities had rebounded from a low of 1.77% in mid-September to 1.94% by late September, but resumed its decline in Oct, ending at 1.77% on Oct 21.
