Can Singapore bank shares keep climbing? What US bank results and global valuations tell us

Beansprout Pro in brief

• DBS, OCBC and UOB have all reached record highs, but their valuations are now well above historical levels. DBS trades at close to 2.9 times book value, compared with about 2.1 times for OCBC and 1.4 times for UOB.
• The latest US bank results offer a constructive read through for Singapore banks, with resilient capital markets activity, rising wealth assets, stronger loan growth and stable credit quality.
• These same trends are already visible locally. Wealth fees are growing across all three Singapore banks, while system loan growth has remained strong and asset quality remains healthy.
• However, strong earnings alone may not be enough to drive valuations much higher. DBS already trades above JPMorgan’s previous valuation peak, showing that even high quality banks can eventually face a ceiling on re rating.
• Overseas examples point to two possible paths. Commonwealth Bank shows how structural capital flows can support a lasting premium, while Bank Central Asia shows how quickly that premium can unwind when sentiment and capital flows reverse.
• In this update, we examine whether Singapore banks can continue to re rate, what would be required to justify higher valuations, and why earnings delivery and structural investor demand will matter more from here.