DBS Bank Ltd, 29 Jan 2026
Excerpt from DBS Bank Ltd report.
Report Summary
- Singapore banks’ net interest margin (NIM) decline is abating, with OCBC and UOB expected to show quarterly improvements, marking a potential turning point after a period of compression.
- Non-interest income is forecasted to soften in 4Q25 due to seasonal effects and weaker loan growth, but overall sector earnings remain resilient.
- Singapore banks saw strong stock performance (5%-10% gains) in early 2026, supported by attractive dividends and stable capital returns, with OCBC maintained as a BUY and a raised target price of SGD23.
- Credit costs are expected to stay stable, although UOB’s remain elevated compared to peers. Asset quality concerns persist, especially for UOB’s US commercial real estate exposures.
- Loan growth is moderating, but infrastructure and construction-related sectors are expected to provide growth opportunities in 2026.
- OCBC is focused on enhancing shareholder returns, with room for higher dividends beyond the current 50% payout, while UOB and DBS maintain stable dividend policies.
- Valuations for Singapore banks are above long-term averages, reflecting expectations of progressive capital return plans and solid fundamentals.
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 website: https://www.dbs.com.sg
