- 3-month SORA was down 20bps m-o-m to 2.62% in March 2025, the lowest since Oct 2022 and 18bps lower than the 1Q25 average, reflecting the Fed Rate cuts. February’s loan growth of 4.9% is the third-highest loan growth since August 2022, but we might see a slight slowdown due to the trade war.
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- Maintain OVERWEIGHT. While more rate cuts are now expected, we believe the banks can maintain NIMs from the steepening yield curve and higher CASA levels. Loan growth is now expected to slow in FY25, but the banks have minimal exposure to the most affected sector (manufacturing) and geography (ASEAN). We expect trading income to continue growing from the heightened volatility.
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3-month SORA is at its lowest since Oct 2022
- Singapore's interest rates were down 20bps m-o-m to 2.62% in March, the lowest since October 2022. Furthermore, March’s 3-month SORA fell by 102bps y-o-y and was 18bps lower than the 1Q25 3-month SORA average of 2.80% (4Q24: 3.29%). This is the most significant y-o-y decline since October 2020. We expect the 3-month SORA to continue declining as more Fed rate cuts are expected.
- Hong Kong interest rates were stable in March. The 3-month HIBOR inched up 1bps m-o-m to 3.92%, reversing the 9bps decline in February. March’s 3-month HIBOR decreased by 78bps y-o-y and is 2bps lower than the 1Q25 3-month HIBOR average of 3.94%. We expect the 3-month HIBOR to trend downwards following the Fed rate cuts.
Singapore loan growth continues to recover
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