Want some Asean? Buy Singapore. The city state has long been seen as a simple way to gain exposure to southeast Asia without the trouble of digging into each country’s bargains and quirks. Singapore’s biggest banks – DBS, United Overseas Bank and Oversea-Chinese Banking Corp – have derived increasing profits from expanding into their fast-growing near neighbours. Yet DBS has underwhelmed with squeezed margins. Is the trade over?

The rationale for the banks’ interest in their neighbours is simple. Singapore has been the slowest-growing economy among the five Asean founders. Its 7 per cent compound rate over the past decade pales next to the 10 per cent seen in Malaysia, the Philippines and Thailand, let alone Indonesia’s 15 per cent plus. The three banks have managed average earnings growth of at least a tenth, too, as they lowered the percentage of home business from three-quarters to less than two-thirds of their profits.

All good. Yet under a Singapore-as-Asean model, if DBS, as southeast Asia’s biggest bank, is finding lending less profitable – a net interest margin of 1.7 per cent from 1.77 per cent in 2011 – then others should too. But in reality DBS has been focused on China and its heavy Hong Kong presence, where margins were weakened by easy liquidity.