DBS Group Holdings, Southeast Asia’s largest bank by assets and earnings, is largely a local bank. In FY2020 ended Dec 31, 2020, some 70% of its net profit of $4.72 billion was from its home market of Singapore. The city state is a relatively small market, and its cost of funds and interest rates are held hostage to the US Federal Reserve.

For much of last year, the Fed had its foot on the accelerator, driving policy rates in the US down to zero, to partly combat the impact of Covid-19. That in itself drove DBS’s net interest margins (NIMs) down to 1.49% in 4QFY2020, taking the whole year’s NIM to 1.62%.

During the results briefing on Feb 10, Piyush Gupta, CEO at DBS, said, “The pace of decline slowed through the year with second quarter 24 basis points lower than the previous quarter, third quarter nine basis points lower and then fourth quarter only four basis points lower. The bulk of the pain appears behind us and a range of 1.45%– 1.50% makes sense for 2021.”

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