DBS, UOB, OCBC rebound from trade war uncertainty. Is the worst over?

What happened?

The share prices of Singapore banks have been very volatile in recent months. 

For example, DBS' share price fell from by more than 20% to around S$37 following the escalation of US-China trade tensions, before recovering to S$44.46 as of 23 May 2025.

Despite the recovery in the share prices of Singapore banks, they have continued to perform worse than Singapore's benchmark Straits Times Index (STI) so far this year. 

As of 23 May 2025, UOB is down by 3.4% year-to-date, and OCBC is down by 2.1% year-to-date. While DBS managed a slight gain of 1.1%, this is below the STI's gain of 2.1%.

With the US trade tariffs remaining a possibility and rising economic uncertainty, I have seen questions in the Beansprout community about whether Singapore banks remain attractive investment options.

In this article, I will look at the recent financial performance of DBS, UOB and OCBC to understand whether they have been impacted by the trade war uncertainty, and find out more about their prospects in the year ahead. 

Singapore banks report flat to lower earnings in 1Q 2025

All three Singapore banks reported flat to slightly lower year-on-year (YoY) earnings in 1Q25, weighed down by higher operating expenses and increased tax charges due to the implementation of the global minimum tax. 

Additionally, the banks made prudent moves to bolster general provisions in light of ongoing macroeconomic uncertainty and market volatility.

Despite the muted bottom line, underlying business momentum remained healthy. 

Non-interest income was a bright spot across the board, supported by record fee income and stronger contributions from wealth management and trading activities.

DBS posted a 2% YoY decline in net profit for 1Q25. However, total fee income surged to a record high of S$1.5 billion (+18% YoY), driven by strong growth in wealth management and market trading performance.

UOB reported flat YoY net profit at S$1.5 billion, down 2% quarter-on-quarter (QoQ). The results were supported by broad-based strength in fee-based income and stable contributions from trading and investment activities.

OCBC recorded a net profit of S$1.88 billion, down 5% YoY but up 12% QoQ. While net interest income declined 4% YoY, this was partially offset by a 10% YoY increase in non-interest income, underpinned by growth in wealth and trading income.

Steady loan growth 

All three local banks reported modest quarter-on-quarter (QoQ) loan growth in 1Q25, supported by broad-based demand across corporate and retail segments.

DBS saw loans expand by 2% QoQ, mainly driven by non-trade loans to large corporates. On a year-on-year (YoY) basis, loan growth came in at 3%.

UOB and OCBC both recorded 1% QoQ loan growth, supported by healthy momentum in both wholesale and consumer lending. On a YoY basis, loan growth was stronger at 6% for UOB and 7% for OCBC, reflecting continued credit expansion across key customer segments.

Net interest margin compression 

All three Singapore banks reported lower net interest income (NII) on a quarter-on-quarter (QoQ) basis in 1Q25, primarily due to net interest margin (NIM) compression in a declining interest rate environment.

DBS saw NII decline by 1.3% QoQ, with NIM narrowing to 2.12% from 2.15% in 4Q24. However, on a year-on-year (YoY) basis, NII was still up 5%, supported by loan growth.

UOB reported a 2% QoQ drop in NII, although NIM remained unchanged at 2.00%. On a YoY basis, NII increased by 2%.

OCBC experienced the largest sequential drop in NII at 4% QoQ, driven by an 11 basis point (bps) contraction in NIM to 2.04%, as loan yields tightened. YoY, OCBC’s NII declined 4%, with margin pressure outweighing growth in loan volumes.

Robust growth in non-interest income 

Non-interest income surged across all three Singapore banks in 1Q25, underpinned by broad-based strength in wealth management, loan-related, and investment banking fees. 

This contributed to a lower proportion of net interest income (NII) as a share of total income, now ranging between 62% and 66%.

DBS posted record net fee income of S$1.3 billion, up 22% year-on-year (YoY) and 32% quarter-on-quarter (QoQ). This was driven by robust performance in wealth management, which saw 35% YoY and 39% QoQ growth.

UOB also delivered strong growth in net fee income, rising 20% YoY and 22% QoQ to S$694 million. The increase was primarily attributed to higher contributions from loan-related and wealth management activities.

OCBC reported a 10% YoY and 36% QoQ increase in non-interest income to S$1.31 billion. Fee income rose 14% YoY and 6% QoQ to S$546 million, supported by strength in wealth management, loan-related, and investment banking segments.

This shift toward a more balanced income mix underscores the banks’ growing diversification beyond net interest income, particularly as interest rate tailwinds begin to moderate.

Fee income is expected to continue contributing a larger share of total income, supported by rising assets under management (AUM) across the banks' wealth platforms. 

In 1Q25, OCBC led with a net AUM inflow of S$7 billion, followed by DBS with S$6 billion. UOB saw a marginal decline in AUM of S$1 billion, although fee income remained resilient.

Credit costs increased reflecting risk management approach

All three banks maintained healthy asset quality in 1Q25, with stable non-performing loan (NPL) ratios. 

However, management remained cautious given the uncertain global outlook, including escalating U.S.-China trade tensions and geopolitical risks. 

As a result, each bank took a pre-emptive approach by raising general provisions to buffer against potential downside risks.

DBS reported a low specific credit cost of 10 bps, but booked 20 bps in general provisions. This raised total credit costs to 30 bps, versus 13 bps in 1Q24 and 20 bps in 4Q24.

UOB saw a decline in specific credit costs to 19 bps (–14 bps YoY), but set aside 16 bps in general provisions, bringing total credit costs to 35 bps, up from 25 bps in 4Q24 and 23 bps in 1Q24.

OCBC similarly raised its general provision buffer to 13 bps, resulting in total credit costs of 24 bps, up 8 bps YoY and 3 bps QoQ.

Strong capital ratios support sustainable dividend 

The banks’ improved profitability and prudent risk management have contributed to stronger Common Equity Tier 1 (CET1) ratios across the board in 1Q25.

DBS reported a CET1 ratio of 17.4%, up sharply from 14.7% a year ago, reflecting strong retained earnings and disciplined capital management.

UOB also saw its CET1 ratio improve to 15.5%, compared to 13.9% in 1Q24, supported by stable asset quality and earnings resilience.

OCBC registered the highest CET1 ratio among the three banks at 17.6%, up from 16.2% in the previous year, further reinforcing its robust capital position.

Banks maintain 2025 guidance but trade tariffs could drive a weaker 2H 2025.

DBS expects group net interest income in 2025 to come in slightly above 2024 levels, with modest net interest margin (NIM) compression offset by healthy loan growth. 

Management anticipates credit costs to normalise to the 17–20 basis points (bps) range but noted that no signs of stress have emerged so far. 

Should credit conditions worsen in the second half, DBS is prepared to raise general provision overlays. 

While pre-tax profits for the year are likely to match 2024 levels, net profit is expected to be lower due to the implementation of the global minimum tax.

UOB has paused its earlier 2025 guidance due to ongoing global market uncertainties. Previously, management had guided for high single-digit loan growth, double-digit fee income growth, and overall higher total income. 

The bank had also indicated expectations for a stable cost-to-income ratio of around 42% and benign credit costs in the range of 25–30 bps.

OCBC continues to maintain its 2025 financial targets. These include a NIM of around 2%, mid-single-digit loan growth, a cost-to-income ratio in the low 40% range, and credit costs between 20–25 bps. The bank also reiterated its total dividend payout ratio target of 60%.

What would Beansprout do? 

While the trade war uncertainty has yet to yet to impact the earnings of Singapore banks significantly, there are some signs that their strong earnings momentum in 2024 may have peaked.

This is driven by declining net interest margin with falling interest rates, as well as more general provisions taken.

However, their impact has been mitigated by the strong growth in their fee income.

In terms of valuation, DBS currently trades at a price-to-book (P/B) ratio of 1.9x, while UOB and OCBC are trading at 1.3x each. These P/B multiples remain above historical averages.

This may suggest that amid economic uncertainty and stable or declining earnings, the room for significant share price upside for Singapore banks may be limited.

However, their share prices appear to be supported by their high dividend payouts. Based on the most recent ordinary dividends, DBS's dividend yield is 5.4%, UOB's dividend yield is 5.2%, and OCBC's dividend yield is 5.0%.

When including capital return dividends, DBS continues to offer the highest dividend yield amongst the three. Annualising the first quarter dividend payout of S$0.75 per share would imply a dividend yield of 6.7%. 

This is above UOB's dividend yield is 6.5%, and OCBC's dividend yield is 6.0%. 

Hence, Singapore banks, particularly DBS, may still remain attractive for investors looking for dividend income

Check out Beansprout's guide to the best stock trading platforms in Singapore with the latest promotions to invest in DBS, UOB and OCBC.

Related Links:

• DBS Group Holdings share price history and share price target
• United Overseas Bank share price history and share price target
• OCBC share price history and share price target

Join the Beansprout Telegram group to get the latest updates on Singapore REITs, stocks, bonds and ETFs.

Important Disclosures

Analyst Certification and Disclosures 

The analyst(s) named in this report certifies that (i) all views expressed in this report accurately reflect the personal views of the analyst(s) with regard to any and all of the subject securities and companies mentioned in this report and (ii) no part of the compensation of the analyst(s) was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst herein. The analyst(s) named in this report (or their associates) does not have a financial interest in the corporation(s) mentioned in this report.

An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst.

Company Disclosure

Global Wealth Technology Pte Ltd (“Beansprout”) does not have any financial interest in the corporation(s) mentioned in this report.

Disclaimer

This report is provided by Beansprout for the use of intended recipients only and may not be reproduced, in whole or in part, or delivered or transmitted to any other person without our prior written consent. By accepting this report, the recipient agrees to be bound by the terms and limitations set out herein.

You acknowledge that this document is provided for general information purposes only. Nothing in this document shall be construed as a recommendation to purchase, sell, or hold any security or other investment, or to pursue any investment style or strategy. Nothing in this document shall be construed as advice that purports to be tailored to your needs or the needs of any person or company receiving the advice. The information in this document is intended for general circulation only and does not constitute investment advice. Nothing in this document is published with regard to the specific investment objectives, financial situation and particular needs of any person who may receive the information. 

Nothing in this document shall be construed as, or form part of, any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities. The data and information made available in this document are of a general nature and do not purport, and shall not in any way be deemed, to constitute an offer or provision of any professional or expert advice, including without limitation any financial, investment, legal, accounting or tax advice, and shall not be relied upon by you in that regard. You should at all times consult a qualified expert or professional adviser to obtain advice and independent verification of the information and data contained herein before acting on it. Any financial or investment information in this document are intended to be for your general information only. You should not rely upon such information in making any particular investment or other decision which should only be made after consulting with a fully qualified financial adviser. Such information do not nor are they intended to constitute any form of financial or investment advice, opinion or recommendation about any investment product, or any inducement or invitation relating to any of the products listed or referred to. Any arrangement made between you and a third party named on or linked to from these pages is at your sole risk and responsibility. 

You acknowledge that Beansprout is under no obligation to exercise editorial control over, and to review, edit or amend any data, information, materials or contents of any content in this document. You agree that all statements, offers, information, opinions, materials, content in this document should be used, accepted and relied upon only with care and discretion and at your own risk, and Beansprout shall not be responsible for any loss, damage or liability incurred by you arising from such use or reliance. 

This document (including all information and materials contained in this document) is provided “as is”. Although the material in this document is based upon information that Beansprout considers reliable and endeavours to keep current, Beansprout does not assure that this material is accurate, current or complete and is not providing any warranties or representations regarding the material contained in this document. All opinions contained herein constitute the views of the analyst(s) named in this report, they are subject to change without notice and are not intended to provide the sole basis of any evaluation of the subject securities and companies mentioned in this report. Any reference to past performance should not be taken as an indication of future performance. To the fullest extent permissible pursuant to applicable law, Beansprout disclaims all warranties and/or representations of any kind with regard to this document, including but not limited to any implied warranties of merchantability, non-infringement of third-party rights, or fitness for a particular purpose. 

Beansprout does not warrant, either expressly or impliedly, the accuracy or completeness of the information, text, graphics, links or other items contained in this document. Neither Beansprout nor any of its affiliates, directors, employees or other representatives will be liable for any damages, losses or liabilities of any kind arising out of or in connection with the use of this document. To the best of Beansprout’s knowledge, this document does not contain and is not based on any non-public, material information. The information in this document is not intended for distribution to, or use by, any person or entity in any jurisdiction where such distribution or use would be contrary to law or regulation, or which would subject Beansprout to any registration requirement within such jurisdiction or country. Beansprout is not licensed or regulated by any authority in any jurisdiction or country to provide the information in this document.

As a condition of your use of this document, you agree to indemnify, defend and hold harmless Beansprout and its affiliates, and their respective officers, directors, employees, members, managing members, managers, agents, representatives, successors and assigns from and against any and all actions, causes of action, claims, charges, cost, demands, expenses and damages (including attorneys’ fees and expenses), losses and liabilities or other expenses of any kind that arise directly or indirectly out of or from, arising out of or in connection with violation of these terms, use of this document, violation of the rights of any third party, acts, omissions or negligence of third parties, their directors, employees or agents. To the extent permitted by law, Beansprout shall not be liable to you, any other person, or organization, for any direct, indirect, special, punitive, exemplary, incidental or consequential damages, whether in contract, tort (including negligence), or otherwise, arising in any way from, or in connection with, the use of this document and/or its content. This includes, without limitation, liability for any act or omission in reliance on the information in this document. Beansprout expressly disclaims and excludes all warranties, conditions, representations and terms not expressly set out in this User Agreement, whether express, implied or statutory, with regard to this document and its content, including any implied warranties or representations about the accuracy or completeness of this document and the content, suitability and general availability, or whether it is free from error. 

If these terms or any part of them is understood to be illegal, invalid or otherwise unenforceable under the laws of any state or country in which these terms are intended to be effective, then to the extent that they are illegal, invalid or unenforceable, they shall in that state or country be treated as severed and deleted from these terms and the remaining terms shall survive and remain fully intact and in effect and will continue to be binding and enforceable in that state or country. 

These terms, as well as any claims arising from or related thereto, are governed by the laws of Singapore without reference to the principles of conflicts of laws thereof. You agree to submit to the personal and exclusive jurisdiction of the courts of Singapore with respect to all disputes arising out of or related to this Agreement. Beansprout and you each hereby irrevocably consent to the jurisdiction of such courts, and each Party hereby waives any claim or defence that such forum is not convenient or proper.