Local Banks Expect More Earnings Volatility as Tariffs Hit Home

Impact Being Felt Through Weaker USD Too, With Singdollar Strengthening Considerably

- Kang Wan Chern Deputy Business Editor

The impact of US President Donald Trump's April 2 tariffs has hit home, with the three local banks and firms in other sectors bracing themselves for more market volatility amid rising trade uncertainties in 2025.

During their results briefings last week, UOB, DBS Bank and OCBC Bank reported flat or lower earnings for the first quarter of 2025 and signaled that lending activities could slow for the rest of the year if the economy unravels.

The three banks also said they have set aside sizeable allowances for 2025 as credit risks rise.

UOB on May 7 reported net profits of $1.49 billion for the first quarter between January and March, unchanged from the same quarter in 2024, as growth stalled and credit costs rose.

During the quarter, allowances for credit and other losses rose 78 per cent to $290 million as the bank beefed up provisions for a tougher year ahead.

UOB chief executive Wee Ee Cheong noted that macroeconomic uncertainties from US tariffs had triggered significant market volatility and disruptions in global trade.

Consequently, the bank will pause its 2025 earnings guidance until the macroeconomic situation stabilizes.

Following the earnings announcement, Mr. Wee bought 100,000 UOB shares for $34.48 per share in the open market for around $3.45 million, raising his stake in the bank to 10.755 per cent.

He had last bought shares in UOB on Feb 20, scooping up 200,000 shares at $38.65 apiece or $7.7 million in total.

DBS on May 8 posted a 2 per cent fall in net profit for the first quarter to $2.89 billion compared with the first quarter in 2024, owing to a 15 per cent global minimum tax, a requirement of large multinational corporations that took effect in January, the bank said. It was the lender's first year-on-year drop in earnings since the first quarter of 2022.