Broker Name: DBS Bank Ltd
Date of Report: 17 Oct 2025
Excerpt from DBS Bank Ltd report.
Report Summary
- Singapore banks are facing ongoing net interest margin (NIM) pressure due to excess SGD liquidity and lower benchmark rates, with NIM compression expected to accelerate into 3Q25 despite aggressive deposit repricing.
- There is increased focus on Hong Kong exposures, especially in commercial real estate (CRE), as local banks expedite asset disposals and recovery efforts, leading to anticipated non-performing loan (NPL) recognition and higher credit losses into 2H25.
- Wealth management activities rebounded in 3Q25 on improved market sentiment, but trading income faces a high comparison base from the previous year.
- Loan growth remains weak with system loans contracting; competition for quality loan assets is intensifying.
- Despite expected continued q/q decline in 3Q25 net profit and softer earnings outlook, Singapore banks’ share prices remain supported by manageable asset quality, ongoing share buybacks, and strong dividend yields of 4.1-6.7%.
- OCBC and UOB are guided to see higher credit costs in FY25F, with UOB potentially increasing general provisions; dividend sustainability is more robust at DBS given stronger capital buffers and a clear dividend policy.
- Hong Kong office CRE continues to face high vacancy and declining rents, resulting in more asset disposals and distressed sales, with Singapore banks likely to continue recognizing NPLs among mid-tier clients.
- DBS maintains its absolute dividend policy, while OCBC and UOB may see dividend pressure if earnings weaken further with faster-than-expected rate cuts and rising credit costs.
Above is an excerpt from a report by DBS Bank Ltd. Clients of DBS Bank Ltd can be the first to access the full report from the DBS Bank Ltd website: https://www.dbs.com
