Singapore bank margins set to rise through 2027 on low NPL formation

Their NPL ratios remained at or below 1% as of H1 2026.

OCBC and DBS are expected to log higher net interest margins (NIMs) in 2026 and 2027 than previously estimated, according to UOB Kay Hian (UOBKH).

DBS is expected to report a NIM of 1.9% in 2026, from previous estimates of 1.87%, and accelerate further to a NIM of 2.01% in 2027, compared to a previous estimate of 1.86%.

OCBC, meanwhile, is expected to report a NIM of 1.75% in 2026 and 1.87% in 2027, higher than the previous estimates of a 1.71% NIM for both years.

Both banks saw muted or manageable formation of non-performing loans (NPL) in the first two quarters of 2026.

DBS’ NPL formation was $98.58m (S$126m) in Q1 and $121.27m (S$155m) in Q2, and NPL ratio is at 1%.

OCBC’s NPL formation was "manageable” at $96.23m (S$123m) in Q1 and $234.71m ($300m) in Q2, with an NPL ratio of 0.9%, UOBKH said.

Separately, both Singapore-headquartered banks were noted for growing their wealth management franchises. DBS is the 4th largest private bank in Asia, according to data from Asian Private Banker, behind UBS and HSBC but neck-to-neck with J.P.Morgan.

OCBC, meanwhile, targets double-digit growth in wealth management fees and assets under management, with its private banking arm Bank of Singapore reportedly sharpening its focus on ultra high net worth clients in Southeast Asia and North Asia, UOBKH said.

(US$1 = S$1.28; as of 29 September 2026)