Part 2/10:
The primary driver behind the banks' robust start is the increase in net interest income, which benefits significantly from higher interest rates. Currently, the U.S. Federal Reserve has set rates at approximately 5.0% to 5.25%, a rise compared to below 5% for most of the previous year. This escalation in global rates directly impacts the Singapore banks' earnings, as they benefit from the widened net interest margins.
Experts forecast that as long as the U.S. interest rates remain elevated or continue inching upward, the banks' margins could sustain or even improve. However, there is caution—analysts warn about potential increases in funding costs and credit expenses that may temper growth in the near future.