DBS, UOB and OCBC near all time highs. What's next for Singapore banks?
Stocks
By Gerald Wong, CFA • 31 Mar 2025
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We recently held a webinar to share our thoughts on DBS, UOB and OCBC, Here's what you need to know about the outlook for Singapore banks.

What happened?
Singapore bank stocks have performed exceptionally well in the past year.
DBS recently hit an all-time high after delivering strong 2024 earnings, while UOB and OCBC have also outperformed the benchmark Straits Times Index (STI) over the past year.
But with concerns about a potential economic slowdown and falling interest rates, I have seen questions in the Beansprout community about whether Singapore banks will continue to do well.
To answer these questions, I held a webinar this week to explore the fundamentals and future outlook of Singapore banks.
During the session, I highlighted the key factors I am monitoring to assess the potential direction of DBS, UOB and OCBC.
For those who couldn't attend, here is the presentation I shared during the webinar.
Transcript of Webinar on "What's Next for Singapore Banks?"
Here's a detailed summary of the key insights and takeaways from the session:
How Have Singapore Banks Performed?
2024 was a standout year for Singapore banks, driven primarily by:
- Record Profits: DBS emerged as a clear leader, reporting an impressive 11% growth in net profits compared to the previous year. OCBC recorded an 8% increase, while UOB saw its profits rise by 6%, reflecting healthy overall growth across the sector.
- Stable Net Interest Margins (NIM): Despite the Federal Reserve's rate cuts, DBS managed to maintain strong margins of approximately 2.15%. UOB saw margins slightly decline to around 2.0%, and OCBC experienced a more noticeable drop from 2.29% to 2.15%, indicating some margin pressure.
- Fee Income Surge: All three banks benefited significantly from increased wealth management activity. DBS notably led this surge, driven by strong growth in assets under management and associated wealth management fees.
- Higher Dividends: Banks rewarded shareholders by raising dividends significantly. Additionally, special dividends were declared, alongside substantial share buyback programs, highlighting strong capital positions.
Key Factors Driving Bank Performance
We identified three critical metrics investors should closely monitor:
- Net Interest Margin (NIM): The resilience of DBS’s margins despite lower interest rates was a notable factor supporting profitability. This metric remains key in evaluating the bank's ability to navigate potential further rate cuts.
- Fee Income: The sustained growth in fee income, particularly from wealth management services, provided essential support against the backdrop of challenging NIM conditions, demonstrating diversification in income sources.
- Dividends and Capital Management: Banks showed solid returns on equity (ROE)—with DBS achieving approximately 16%, UOB around 13%, and OCBC close to 12%. Combined with strong capital ratios (CET1 around 17% for DBS and OCBC), these factors justify banks' abilities to sustain higher dividends and share buybacks.
Outlook for 2025
- DBS remains optimistic, forecasting stable net interest income despite potential margin compression. Loan growth is expected to balance the impact of lower interest rates.
- UOB anticipates higher total income driven by high single-digit loan growth and double-digit increases in fee income
- OCBC provides a more cautious outlook, anticipating further NIM pressure and increased operating costs
Valuation and Investment Considerations
- Price-to-Book Ratios: DBS currently trades at about 2 times its book value, significantly above its historical average. UOB and OCBC trade around 1.35 times, similarly higher than their long-term averages, indicating elevated valuations.
- Dividend Yields: Dividend yields remain above the market average, with DBS potentially offering up to a 6.6% yield when considering special dividends. UOB's yield is estimated around 6.2%, while OCBC offers a solid yield near 5.9%.
Risks and Macro Considerations
We also emphasised the importance of monitoring several key risks:
- Global Economic Risks: Any potential U.S. recession or escalating trade tensions could significantly impact loan growth, fee income, and asset quality, thereby affecting bank profitability.
- Interest Rate Sensitivity: Further rate cuts by the U.S. Federal Reserve may negatively impact net interest margins, a critical profitability driver for banks.
Resources mentioned in the video
- DBS historical dividend yield and dividend forecast
- UOB historical dividend yield and dividend forecast
- OCBC historical dividend yield and dividend forecast
- US Fed Interest Rate Tracker
Join the Beansprout Telegram group for the latest insights on Singapore stocks, REITs, bonds and ETFs.
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