Report Summary

• Sector Action: Singapore banks sector upgraded from Neutral to Overweight due to expected ROE expansion driven by Net Interest Income (NII) growth and wealth management business structural growth.
• Top Pick: DBS Group (DBS SP) – Action: Add. Target Price (TP): S\$69.90. Current Price: S\$62.76. DBS is preferred for best-in-class ROE and potential special dividend. FY27F yield: ~5.6%. Re-rating catalysts include sustained wealth management fee income and write-back of provisioning.
• OCBC (OCBC SP) – Action: Add (upgraded from Hold). TP: S\$26.00. Current Price: S\$23.40. ROE assumption lifted due to acquisition of HSBC Indonesia and expected non-II growth.
• United Overseas Bank (UOB SP) – Action: Add (upgraded from Hold). TP: S\$42.60. Current Price: S\$37.79. ROE assumption increased, and dividend yield remains respectable.
• Key Idea: Capital inflows, stable SORA, and re-acceleration in loan growth position Singapore banks for NIM and NII expansion in FY27F. Sector is positioned for higher earnings and stronger returns.
• Actionable Insight: Investors should focus on DBS Group for sector-leading yield and ROE, with OCBC and UOB also recommended as Adds with upside potential.