THE three local banks have had an amazing 2012, with net profits jumping 40 per cent to $10.6 billion from $7.6 billion helped by one-off gains.
But excluding one-offs, core banking business still performed pretty well boosted by bouyant bond markets amid record low interest rates and strong credit demand from robust regional economies.
And although loans growth slowed to single digit from 2011's almost 30 per cent and interest margins fell faster than expected, asset quality remained healthy which helped contribute to the banks' double-digit earnings growth.
Said Kenneth Ng, CIMB head of research: "Last year, net interest income was still growing; the big driver was non-interest income which was very strong."
"It was a year where interest rates ground to record lows and bond prices rose to record highs," he said. In addition, with Singapore as a funding centre for regional loans, the banks enjoyed strong loan demand from Indonesia and other developing countries, he said.
DBS Group Holdings' total loan book grew 8 per cent to more than $210 billion last year. Growth was broad-based, led by corporate loans in Singapore and the region and consumer loans. Housing loans rose 10.4 per cent to $45.6 billion.
On this year's projected 9-10 per cent loan growth amid slow economic activity, DBS chief executive Piyush Gupta said 40 per cent of DBS' business is outside Singapore.
Singapore is projected to grow 1-3 per cent this year, following 1.3 per cent in 2012. And the Republic being a financial centre means banks sell loans not just to the domestic economy, he said during the bank's Q4 earnings presentation earlier this month.
Last year, total lending rose 17 per cent, according to estimates from the Monetary Authority of Singapore.