UOB set for growth as DBS, OCBC earnings hold steady: report

The sector benefited from dividend potential and provision write-backs.

Singapore banks will likely post mixed sequential earnings for the fourth quarter (Q4) of 2025, as projections for United Overseas Bank (UOB) indicate growth from a low base, whilst DBS Bank and Oversea-Chinese Banking Corporation (OCBC) are expected to remain flat to negative.

Potential dividend increases for DBS and OCBC support a positive sector rating, with expectations underpinned by capital buffers and general provision write-backs, Maybank Research said.

The report also noted that net interest income will likely hold, as loan momentum and liquidity inflows offset margin compression. Net interest margin contraction moderated in Q4, with the Singapore overnight rate averaging a 27-basis-point fall, compared to a 60-basis-point decline in Q3.

System loan growth for 2025 reached 5%, exceeding Maybank’s forecasts, driven by demand in construction, mortgages, and small- and medium-enterprise lending. Management guidance for 2026 is expected to focus on total net interest income rather than interest margins, the report said.

Non-interest income faces deceleration as holiday periods impact wealth management fees. Brokerage and loan fees provide support for OCBC, whilst UOB anticipates a recovery in credit card fees following redemptions in Q3.

Sector costs and asset quality risks remain low, with the cost-to-income ratio holding at 40%. UOB projects IT costs for retail platform upgrades. Credit costs are expected to contract relative to Q3, whilst DBS and OCBC show potential for provision write-backs.

DBS reported its financial results on 9 February, with projected income of $5.66b (US$4.44b) to $5.86b (US$4.59b) and earnings of $2.67b (US$2.09b) to $2.81b (US$2.20b).

UOB follows on 24 February, with estimated income of $3.48b (US$2.73b) to $3.51b (US$2.75b) and earnings of $1.35b (US$1.06b) to $1.43b (US$1.12b), whilst OCBC reports on 25 February, with expected income of $3.53b (US$2.77b) to $3.55b (US$2.78b) and earnings of $1.88b (US$1.47b) to $1.98b (US$1.55b).

(SG$1 = US$0.78)