Singapore banks to post loan growth but margins to dip in Q2

OCBC may reach its full-year loan growth guidance by H1, the report said.

Singapore banks should report a rise in loans and earnings for the Q2 period, but net interest margins (NIMs) are likely to decline, according to estimates from DBS Group Research.

System loan growth is expected to be a “key support” for the banking system’s earnings in Q2, with DBS estimating a 2% to 3% loan growth for the quarter.

OCBC has the potential to reach its full-year mid-single-digit guidance by H1 2026, DBS Group Research said.

UOBmay log higher growth in wealth fees during the quarter due to a lower base, the report said.

DBS Group Research sees limited impact on Hong Kong wealth inflows from the upcoming individual outbound direct investment rules.

“We see potential for banks to revise up loan growth guidance, with Singapore’s GDP growth upgrade a tailwind for loan growth,” the report said.

OCBC and UOB’s asset yields are expected to benefit more from stable interest rates during Q2 2026, whilst fixed rate books continue to be repriced, it added.

However, repricing pressures will resist, and DBS says it is likely that OCBC and UOB will see a 2-basis point to 4 basis point NIM decline compared to Q1.

A separate report by UOB Kay Hian said that the Big 3 might see mild NIM compression during the quarter but post “sterling” wealth management growth.

Of the three banks, DBS is expected to report flat net profit growth, whilst OCBC's net profit will rise 7%, according to UOB Kay Hian.