DBS, OCBC and UOB hit record highs in July 2026. What could drive them higher

What happened?

Singapore bank stocks have been making new all-time highs.

DBS was one of the three best-performing Singapore blue chips in May, and the momentum has continued with the share price reaching a new all-time high of above S$70 recently.

Earlier, we had also looked at how DBS and OCBC's record run has been supported by wealth management income, as fee income from Singapore's growing wealth hub has helped cushion the drag from lower interest rates on net interest income.

This ties into a broader theme we flagged, that Singapore's rise as a wealth management hub could support Singapore banks over the long run, as more family offices, private banking assets and cross-border wealth flow through Singapore's financial system.

More recently, we compared DBS, OCBC and UOB on earnings growth, capital strength and dividend sustainability, and found that DBS and OCBC continue to stand out on EPS growth, ROE and capital ratios, while UOB still needs to show a clearer earnings recovery.

Now, with all three banks trading at or near record highs and sentiment continuing to improve, the question many in the Beansprout community are asking is whether the rally has further room to run.

In this article, I look at what could drive DBS, OCBC and UOB next, and which Singapore bank looks more attractive after the rally. 

Why DBS, OCBC and UOB may still have potential upside

The rally in Singapore bank stocks has not been driven by dividends alone.

It also reflects improving investor expectations around bank margins, fee income, capital returns and regional growth.

The key question now is whether these drivers can continue to support earnings, even with DBS, OCBC and UOB trading at or near record highs.

#1 - SORA may have bottomed, easing pressure on bank margins 

One reason investors are paying closer attention to Singapore banks is that the Singapore Overnight Rate Average, or SORA, may have found a floor. 

SORA affects loan yields and net interest margins, which are key drivers of bank earnings.

After falling by about 2.6 percentage points through 2024 and 2025, 3-month SORA now appears to be stabilising. This was a bigger decline than the 1.75 percentage point fall in US interest rates, suggesting that excess liquidity had built up in Singapore’s banking system.

That now appears to be reversing.

In May 2026, banking system loans grew 8.7% year-on-year, ahead of deposit growth of 6.8%. This pushed the loan-to-deposit ratio back up to 68.7%, while the CASA ratio slipped by 50 basis points to 54%.

If consumer and corporate loan demand continues to absorb excess liquidity, SORA could find stronger support from here.

This would help ease the net interest margin pressure that has weighed on Singapore banks over the past year.

More importantly, this could support the view that the worst of the margin compression may be behind us.

If net interest income and net interest margins begin to recover in FY2027, this could become an important re-rating catalyst for the sector.

#2 - Wealth management income is helping Singapore banks offset lower interest rates 

The second support comes from wealth management and other fee income.

For Singapore banks, this includes fees earned from private banking, investment products, insurance, advisory services and other wealth-related activities. 

This is becoming one of the cleanest growth angles for Singapore banks, especially as lower interest rates put pressure on net interest margins.

DBS’s wealth income rose from S$4.43 billion in FY2023 to a record S$5.70 billion in FY2025, an increase of about 29% over two years. In 1Q2026, DBS’s wealth management fees also reached a record S$907 million.

OCBC’s wealth management income now accounts for about 37% of group income, making it a major contributor to the bank’s earnings base.

UOB is also trying to scale up this part of its business, with a target to roughly double wealth income to S$2.5 billion by 2030.

This matters because wealth management income is fee-based and relatively capital-light. It can help banks defend return on equity (ROE) even when loan margins are under pressure.

It also gives investors another reason to look beyond net interest margin (NIM) trends alone.

If wealth management fees, trading income, card fees, insurance and transaction banking income continue to grow, DBS, OCBC and UOB would have a broader earnings base that is less dependent on the interest rate cycle. 

For DBS and OCBC in particular, this has helped support earnings resilience and may partly explain why they continue to trade at valuation premiums compared with UOB. 

#3 - Strong capital ratios are supporting bank dividends, buybacks and capital returns 

A third driver for Singapore bank stocks is their attractive dividend yields, supported by their strong capital position. 

Capital returns have become a bigger part of the shareholder return story, especially as DBS, OCBC and UOB remain well capitalised despite a more challenging interest rate environment. 

DBS also continues to offer a dividend yield with a meaningful spread over the Singapore 10-year government bond yield.

DBS, OCBC and UOB all have Common Equity Tier 1, or CET1, ratios comfortably above regulatory minimums. 

CET1 is a key measure of how much high-quality capital a bank has to absorb losses. 

For investors, a strong CET1 ratio gives the banks more flexibility to return excess capital through ordinary dividends, special dividends and share buybacks. 

Related links:

• DBS dividend history and dividend forecast

• OCBC dividend history and dividend forecast

• UOB dividend history and dividend forecast

What are the risks to DBS, OCBC and UOB?

#1 - Increase in Fed rate cut expectations may pressure net interest margin again

With the rally in the share prices of Singapore banks driven by rising expectations of Fed rate hikes, one key risk to the share prices of Singapore banks would be a reversal of such rate hike expectations.

If the SIBOR were to decline again, this could put renewed pressure on net interest margins, especially as asset yields reprice lower while deposit costs may not fall as quickly. 

Since net interest income remains a major earnings driver for DBS, OCBC and UOB, a sharper than expected decline in margins could weigh on earnings growth.

#2 - Sharp economic slowdown may pressure wealth management fee growth and lead to increase in credit cost

While the global economy has been resilient, an unexpected sharp economic slowdown may reduce customer investment activity, which could slow wealth management fee growth. 

Also, slower economic growth may affect borrowers’ repayment ability, leading to higher credit costs and more provisions for potential bad loans.

#3 - Valuations are higher than historical averages

DBS, OCBC and UOB are also trading at valuations that are higher than their historical averages. 

This suggests that the market has already priced in a fairly positive outlook for earnings, dividends and capital returns. 

DBS is currently trading at a price-to-book valuation of 2.9x, above its historical average of 1.9x.

OCBC is currently trading at a price-to-book valuation of 2.0x, above its historical average of 1.2x.

UOB is the cheapest amongst the Singapore banks at a price-to-book valuation of on of 1.5x, but still above is historical average of 1.1x

If earnings growth slows, interest rates fall faster than expected, or asset quality weakens, the valuation of Singapore banks may be impacted. 

What would Beansprout do?

DBS, OCBC and UOB have appealed to investors due to their attractive dividend yields. 

However, with DBS, OCBC and UOB trading near record highs, the key question is whether the higher valuations can be supported by earnings growth.

A bottoming SORA, stronger wealth management income and ongoing capital returns may support profit growth and total shareholder returns for the DBS, OCBC and UOB.

This is where I would consider the banks as Opportunity Pot candidates within Beansprout four pots of wealth.

To screen for stocks for my opportunity, I would evaluate their revenue and earnings momentum, balance sheet strength and return on equity based on our opportunity pot screening framework

DBS and OCBC have shown stronger momentum through wealth management, fee income and non-interest income, while UOB’s 1Q26 results were more subdued.

All three banks are well capitalised, with enough excess capital to support dividends, buybacks and special capital returns.

Return on equity also separates the banks. DBS and OCBC have consistently delivered ROE above 10%, while UOB’s ROE dipped in 2025 and would need to recover more clearly.

Overall, DBS and OCBC look better positioned because they have stronger fee income momentum, higher return on equity and more consistent earnings delivery. 

OCBC also has a clearer re-rating angle if capital returns and wealth expansion continue to deliver.

UOB remains cheaper and could offer catch-up potential, but it still needs to show clearer earnings recovery and better returns from its regional integration.

However, with the strong performance year-to-date, I would not chase the rally aggressively at current levels. 

Instead, I would look to add gradually on pullbacks, while watching whether fee income growth can continue to offset net interest margin pressure.

Overall, the rally in DBS, OCBC and UOB reinforces our view on why Singapore stocks are still worth looking at in 2026. 

Singapore’s rise as a wealth management hub is one of the structural themes that could continue to support the local banks over time. But it is not the only theme we are watching.

Beyond the banks, there may be other areas of the Singapore market supported by long-term trends, including energy and food security, AI and data centre growth, and continued infrastructure spending. Find out more about the 4 growth themes we are watching in Singapore stocks here. 

For investors looking for more higher-conviction ideas, you can explore our curated stock opportunities here.

Which Singapore bank are you backing at these levels: DBS, OCBC or UOB? Share your thoughts with us in the Beansprout Telegram community.

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