Singapore’s big three banks—DBS, UOB, and OCBC—delivered resilient earnings for Q4 2024, despite falling net interest margins (NIMs) due to interest rate cuts. While all three lenders announced capital return plans, investor reactions were divided, particularly regarding OCBC’s more conservative approach.

Capital Returns: DBS and UOB Impress, OCBC Lags

DBS led the way with a special “capital return” dividend of S$0.15 per share per quarter for 2025, alongside its S$3 billion share buyback program. Investors cheered the move, driving DBS shares past S$46 to an all-time high.

UOB also pleased investors with a special dividend of S$0.50 per share, paid over two tranches in 2025, and a S$2 billion share buyback program. Analysts see this as a vote of confidence in UOB’s earnings outlook, supporting higher return on equity (ROE) projections for the next three years.

OCBC, however, faced a lukewarm response to its capital return plan. It committed to S$2.5 billion in shareholder returns over two years but cut its final dividend to S$0.41 per share from S$0.42, despite a S$0.16 special dividend. This disappointed investors, sending OCBC shares lower post-announcement. Citi analyst Tan Yong Hong noted that investors preferred special dividends to be incremental rather than offset by reductions in ordinary dividends.

Strong Q4 Earnings Despite Rate Pressure
All three banks saw continued loan recovery, although lower interest rates weighed on NIMs. Wealth management performance was seasonally weaker, but assets under management (AUM) remained strong:

DBS AUM: S$426 billion (+17% YoY)
UOB AUM: S$190 billion (+8% YoY)
OCBC AUM: S$299 billion (+14% YoY)
Q4 2024 Profits:

DBS: S$2.52 billion (+11% YoY)
UOB: S$1.52 billion (+8.6% YoY)
OCBC: S$1.69 billion (+4% YoY)

2025 Outlook: Diverging Views on Rate Cuts and Economic Risks

Bank executives offered mixed expectations for 2025:

DBS and UOB remain optimistic about Asean resilience and fee growth.

OCBC took a more cautious stance, forecasting three rate cuts, while DBS and UOB expect only one or two. CEO Helen Wong cited global trade tensions and market volatility as potential headwinds.

Analysts flagged OCBC’s NIM guidance of around 2% as overly conservative, with concerns about its exposure to struggling Hong Kong commercial real estate. In contrast, UOB’s more aggressive buyback strategy signals confidence in earnings strength.

Meanwhile, leadership changes at DBS are under watch, as Deputy CEO Tan Su Shan is set to take over from Piyush Gupta on March 28. Analysts expect strategic continuity given DBS’s strong execution under Gupta.

The Bottom Line: A Strong but Divided Banking Sector

Singapore’s banks remain financially solid, with robust capital returns and steady earnings growth. However, investor reactions vary, with DBS and UOB seen as more shareholder-friendly, while OCBC faces skepticism over its cautious dividend strategy. With interest rate cuts, economic uncertainty, and leadership transitions ahead, 2025 will be a crucial year for Singapore’s banking giants.

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