The Straits Times Index (SGX: ^STI) has just crossed a major milestone, hitting an all-time high of 4,005 on 27 March 2025.
This new record surpasses its previous peak from October 2023, and even the high it reached way back in 2007 before the Global Financial Crisis.
What makes this climb even more noteworthy is the context: while the US market continues to struggle with volatility — partly due to ongoing trade tensions and tariff concerns — the STI has quietly pushed its way higher.
So, what’s driving this resilience?
Let’s take a closer look.
The STI’s Rally Is (Still) All About the Banks
If you look under the hood, you’ll see this isn’t a broad-based surge across all sectors. In fact, just three companies are doing much of the heavy lifting — and they’re all banks.
We’re talking about DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corporation (SGX: O39), and United Overseas Bank Limited (SGX: U11).
Combined, these three banks account for over 54% of the STI’s total weighting.
So when they rise, the entire index moves — and that’s exactly what we’ve seen over the past few months.
A Closer Look at the Big Three
DBS Group Holdings Ltd (SGX: D05)
DBS remains Singapore’s largest bank by market capitalisation and continues to deliver strong results.
For the first nine months of 2024, total income rose 11% year on year to S$16.8 billion, with both net interest and non-interest income posting solid growth.
Net profit hit a record S$8.8 billion, up 12% year on year, and the bank raised its third-quarter dividend to S$0.54, a 22.7% increase from the year before.
CEO Piyush Gupta expects loan growth and a strong economy to support earnings, even if net interest margins soften. Stable interest rates and steady consumer spending could also boost non-interest income, including card fees.
Oversea-Chinese Banking Corporation (SGX: O39)
OCBC also delivered a record net profit of S$7.6 billion for 2024, up 8.1% year on year.
While net interest income rose just 1%, there were strong positives elsewhere — non-interest income jumped 22%, and loan growth hit 7.6%, more than double DBS’s pace.
OCBC’s net interest margin came in at 2.2%.
The bank announced a S$2.5 billion capital return plan, including a special dividend and share buybacks over two years. While its final dividend of S$0.41 was slightly below last year’s, a proposed special dividend of S$0.16 lifted its payout ratio to 60%.
OCBC is guiding for stable margins and mid-single-digit loan growth in 2025.
United Overseas Bank Limited (SGX: U11)
UOB delivered a strong finish to the year with Q4 2024 net profit up 9% year on year to S$1.52 billion, beating expectations.
While net interest margin dipped slightly to 2.00%, loan growth and higher fee income supported the bank’s results.
To return value to shareholders, UOB announced a S$3 billion capital return package, including a 50 cent special dividend and a S$2 billion share buyback over three years. It also raised its final dividend to 92 cents, up from 85 cents a year ago.
The bank remains optimistic about maintaining margins and growing revenue as it continues to expand across ASEAN.
Why Are the Banks Doing Well?
Singapore’s banks have been supported by a combination of favourable conditions.
First, earnings growth has remained strong. Loan books continue to expand, and asset quality remains high — a sign of resilience in a still-fragile global economy. At the same time, all three banks have been rewarding shareholders with rising dividends and newly announced share buyback plans, reinforcing their commitment to capital returns.
Interest rates, while expected to ease later this year, are still elevated enough to support healthy net interest margins. This rate environment has allowed the banks to sustain strong profitability without relying on aggressive loan growth.
Meanwhile, global uncertainty, including persistent headwinds in the US and a patchy recovery in China, has led investors to rotate into Singapore’s banking sector. With their strong balance sheets and steady dividends, the local banks are seen as reliable and attractive options in a volatile world.
Get Smart: Making Sense of It All
The STI’s breakout to 4,005 is a significant milestone, but it’s also a reminder that the index isn’t always a broad reflection of the entire market.
Instead, a handful of companies, in this case, the three largest banks, are driving most of the movement.
For investors, this highlights two key points:
- Know what you’re actually investing in.
The STI may be made up of 30 companies, but more than half the weight sits with just three names. - Focus on fundamentals.
Whether it’s earnings, dividends, or balance sheet strength, DBS, OCBC, and UOB have shown why they continue to be cornerstones of the Singapore market.
The STI may have hit a new all-time high quietly, but the real story lies beneath the surface — and it’s worth understanding what’s truly driving the market.
Explore Singapore’s top “evergreen” stocks with our FREE report. It spotlights 7 Singapore blue-chip stocks with solid dividends and growth potential. Click here to download it now to create a flow of dividend income, regardless of market conditions.
Follow us on Facebook and Telegram for the latest investing news and analyses!
Disclosure: Joanna Sng owns shares of DBS, UOB, and OCBC.