Singapore’s banks are seeing an unexpected uplift as investors and high-net-worth individuals shift funds in search of stability amid the Middle East conflict.
The city’s strong domestic stability and resilience are expected to keep drawing liquidity away from more volatile regions overseas.
According to UOB Kay Hian analyst Jonathan Koh, rising geopolitical tensions have strengthened Singapore’s safe-haven status, boosting deposits and wealth management inflows into local banks—particularly from Middle East-based clients moving assets out of perceived higher-risk hubs such as Dubai.
These inflows are likely to enhance balance sheet liquidity and support fee-based income, with private banking and trading activities set to benefit the most.
Koh added that banks should continue to post resilient earnings, as any decline in net interest income may be offset by rising fee income, especially from wealth management services.
He also noted that banking stocks remain attractive for yield in Singapore’s low interest rate environment.
However, escalating tensions in the Middle East remain a key risk. A prolonged conflict could push up inflation through energy and trade channels, depending on its scale and duration.
Disruptions to military activity and shipping routes could drive up global prices for oil, gas, and fertilisers, contributing directly to headline inflation and indirectly to core inflation through higher transportation, manufacturing, and food costs.
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