DBS, OCBC, UOB have enough liquidity to mitigate funding costs, analysts say

HIGHER funding costs are likely to be a key threat to the earnings of the three Singapore banks this year, but analysts expect them to have enough liquidity to manage costs, especially given impending interest rate cuts.

Funding costs will likely come down for DBS, OCBC and UOB, reflecting forecasts of a 75-basis-point cut in interest rates in 2024, said Ivan Tan, analyst at S&P Global Ratings.

“Singapore banks are entering… the taper cycle from a position of strength, with a healthy funding and liquidity position which offers them the flexibility to adjust deposit rates,” he said.

Banks have already started reducing deposit rates. On Apr 1, UOB announced it was cutti…