Singapore banks’ interest rates will remain elevated until Q3: analyst

DBS and OCBC are expected to provide dividend yield of 7.4% and 6.5%.

Singapore banks’ domestic interest rates are expected to remain elevated for “longer” and will only start to recede in the last three months of 2024, according to UOB Kay Hian.

The US Federal Reserve is expected to push for two rate cuts in the second half of 2024, noted analyst Jonathan Koh anticipates in a commentary. This will be a factor in Singapore’s DBS and OCBC maintaining higher interest rates for longer.

Rates will begin to fall in Q4, in tandem with the US rate cuts, Koh said.

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“We raised our 2025 earnings forecasts for DBS by 6% and OCBC by 5%. DBS and OCBC [will] provide 2025 dividend yield of 7.4% and 6.5% respectively,” Koh added.