How the Fed Will Help Singapore REITs Outshine Banks
Lower interest rates may make landlords’ incomes more attractive just as lenders’ margins start to compress.
Stepping out of the banks’ shadows.
Photographer: Roslan Rahman/AFP/Getty Images
Singapore property owners have spent a long time languishing in the shadow of the chart-topping performance of the island’s banks. But with US Federal Reserve Chair Jerome Powell signaling the start of monetary easing from next month, the landlords’ day in the sun may not be far away.
Higher-for-longer global interest rates pumped up the profitability of loans at Singapore’s three homegrown banks. Last year, DBS Group Holdings Ltd., Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. distributed a combined S$11.3 billion ($8.7 billion) in dividends, double the 2020 payout. This year, too, DBS has been generous in sharing the spoils of high net interest margins with investors. There hasn’t been much reason — yet — for the lenders to make aggressive provisions for loan losses.