Banking in Singapore is a flourishing industry that has grown significantly in the recent years. Total banking assets in Singapore have risen from about $668 billion in 2008 to about $859 billion in 2011. The Banking Sector provides traditional lending and depository functions, as well as other services in the areas of commercial banking, financial advisory, insurance broking and capital market services. The banking industry is a key player in the country's financial market segment, soon emerging as one of the strongest in the world. It is the banking hub of Southeast Asia and almost all major banks of the world have branches here. Some of the top banks in Singapore are Development Bank of Singapore (DBS), OCBC Bank, United Overseas Bank (UOB) etc.
The finance industry in Singapore is regulated by the Monetary Authority of Singapore. Singapore's total Domestic Banking Unit (DBU) loans outstanding registered y-y growth of 17.9% to S$479.4 billion in Oct 2012. Business loans and Consumer loans reported growth of 19.1% y-y and 16.3% y-y respectively. Total loans grew 1.5%, led by the growth of Business loans by 1.9%, while Consumer loans grew at a slower 0.9%. 57.5% of total loans comprise of Business loans, with the remaining attributed to Consumer loans.
The volumes of syndicated loans and trade finance facilities have continued to grow, albeit at a more subdued pace compared to a year ago. Total syndicated loans grew by 4.2% y-o-y in Q3 2012 compared to 15.4% in the same period last year. Trade finance facilities also grew by a much more modest 13% y-o-y in Q3 this year compared to 63.4% y-o-y in Q3 last year.
The performance of the local banking groups has remained resilient. Their combined net profits exceeded S$2 billion in each of the first three quarters of 2012. The growth in earnings was underpinned by higher net interest income due to the growth of non-bank loans. However, there was a slight compression in net interest margins (NIM) from 1.83% in Q3 2011 to 1.75% in Q3 2012.
Being home to over 700 local and foreign financial institutions, Singapore is undoubtedly one of the leading international financial sectors in the world. Singapore is not only one of the most established capital markets in the Asia-Pacific with the Singapore Exchange (SGX) as the preferred listing location of close to 800 companies, and it is currently the most active foreign exchange trading centre in Asia (excluding Japan), the second largest over-the-counter derivatives trading centre in Asia and a leading commodities derivatives trading hub. The industry currently contributes more than 13% of Singapore's GDP and employs 5.4% of the total workforce.
The future of Singapore's financial sector looks sparkling. Rising wealth creation in the country is expected to drive the demand for private banking, asset management, treasury and insurance services and this relates to an abundant amount of employment opportunities for talented professionals.
(Source: Insight Alpha)