DBS Group Holdings, Oversea-Chinese Banking Corp and United Overseas Bank — warned last week that the global environment remains uncertain even though some business activity has picked up as economies reopen. Singapore is a major financial center exposed to global and regional economic shocks. But its financial system has remained resilient, thanks to regulatory oversight which the International Monetary Fund.
Singapore’s top lenders have opted to set aside significantly more funds for potential loan losses as the coronavirus pandemic continues to slam the global economy. In the first six months of this year, DBS shored up its total allowances to 1.94 billion Singapore dollars ($1.42 billion). OCBC and UOB set aside 1.41 billion Singapore dollars ($1.03 billion) and 682 million Singapore dollars ($497.5 million), respectively.
Global interest rates at an all-time low, the three banks reported a sharp decline in net interest margins in the second quarter. Net interest margins, or NIMs, measure how profitable bank lending is by comparing the difference between interest charged on loans and that paid out to depositors.