SINGAPORE: Singapore’s banking giants DBS Group Holdings and Oversea-Chinese Banking Corporation (OCBC) are expected to deliver year-on-year (YoY) net profit growth for the fourth quarter of 2024, though performance is anticipated to weaken on a quarter-on-quarter (QoQ) basis, according to UOB Kay Hian (UOBKH) analyst Jonathan Koh.

DBS is projected to report a 12% YoY increase in net profit for the final quarter of 2024. However, this represents a 16% decline compared to the previous quarter, reflecting a softer QoQ performance.

The bank’s quarterly dividend is expected to rise by 6 Singapore cents to 60 cents for Q4, indicating continued confidence in shareholder returns. Loan growth remains modest at 2% YoY, supported by the strong performance of the US dollar and Hong Kong dollar.

Wealth management fees are forecasted to grow by 54% YoY, contributing approximately S$570 million to total income. Despite the annual growth, this marks a 6% QoQ decline, signalling a seasonal dip in performance. Overall fee income is expected to rise 16% YoY.

Net interest margin (NIM) compression, initially anticipated earlier, has been deferred to Q1 2025. This delay follows the US Federal Reserve’s decision to reduce interest rates by 100 basis points (bp) between September and December 2024.

OCBC is also expected to show solid YoY growth, with a forecasted 8% increase in net profit for Q4 2024. Similar to DBS, its QoQ performance is set to decline, with an estimated 11% drop in net profit.

The bank’s final dividend for the second half of 2024 is predicted to rise by 9.5% YoY to 46 Singapore cents, aligning with an estimated payout ratio of 53.7% for the year.

Wealth management is expected to deliver an 18% YoY increase, but similar to DBS, contributions are likely to be 6% lower QoQ, reflecting seasonal trends.

OCBC’s NIM is anticipated to decrease by 13bp YoY and 2bp QoQ to 2.16%. Net interest income could see a slight decline of 1.1% YoY during the quarter, influenced by easing interest margins and macroeconomic factors.

As the banks prepare for 2025, the focus will likely shift to managing NIM compression and sustaining fee-based income growth to navigate a challenging global economic landscape.