Singapore’s local banks are becoming less generous as they face sluggish economic growth and a less competitive labour market.
The annual growth of staff costs per head – total employee expenses (such as salaries and bonuses) divided by total headcount – has slowed at all three domestic banks, according to figures compiled from their second quarter results.
Most dramatically, costs per worker fell 0.5% year-on-year in Q2 at OCBC, in comparison with a 4.9% year-on-year rise at the same firm in Q1.
DBS is now spending just 0.1% more on its average employee than it was 12 months ago – well below Singapore’s current rate of inflation of 1.1%. In Q1 the same annual comparison was an inflation-busting 2.1%
Compensation at Singapore banks had been rising steadily over the past few years as the firms took on global competitors in talent-short functions such as risk, compliance and corporate banking.
But because local firms have now largely reached pay parity with rivals such as Citi, HSBC and Standard Chartered, there is less incentive for them to keep offering hefty salary rises, say recruiters.
Meanwhile, operating conditions for Singapore banks are make it harder to justify raising pay.
Ratings agency Moody’s recently revised its outlook for Singapore’s banking system to negative from stable, largely because of softer domestic and regional economic and trade growth, and the banks’ high exposure to the struggling oil and gas sectors.
Bank lending in Singapore fell 2.7% in June from a year ago, extending the longest stretch of declines on record, according to data from the Monetary Authority of Singapore.
DBS’s profits fell 6% year-on-year in Q2, while OCBC’s tumbled 15%.
“Despite the results, Singapore banks are still seen as stable and attractive employers by most candidates here,” says an agency recruiter in the Republic who asked not to be named. “Their pay rises and hiring have slowed somewhat, but not as much as at the international firms in Singapore.”
Total headcount at DBS and OCBC rose 2% and 1.9% respectively year-on-year in Q2, according to their results.
UOB’s workforce shrunk by 1.9%, but that decline was achieved mainly by not replacing staff who left rather than through compulsory redundancies, according to a recruiter with knowledge of the firm.