Singapore’s heavyweight banking trio – DBS, OCBC, and UOB – have wrapped up their latest earnings season. On the surface, the numbers look spectacular, with record full-year profits driven by the tail-end of the global interest rate hike cycle. Yet, the market’s reaction has been telling: a distinct downward correction in share prices.
This divergence between backward-looking record profits and forward-looking market pessimism defines the current “mixed results” narrative. Investors are no longer celebrating yesterday’s rate hikes; they are pricing in tomorrow’s rate cuts.
The current share price correction isn’t necessarily a sign of fundamental rot, but rather a rational resetting of expectations as the banks transition from a massive tailwind to a potential headwind. Here is an analysis of the results and the outlook across three time horizons.
Condensing the “mixed and similar” results
| DBS | OCBC | UOB | |
| Q4 2025 Net Profit | $2.36 B | $1.75 B | $1.41 B |
| FY 2025 Net Profit | $11.03 B | $7.42 B | $4.68 B |
| FY 2025 Change in YoY Net Profit | -3% | -2% | -23% |
| FY 2025 Net Interest Margin (NIM) | 2.01% | 1.91% | 1.89% |
| FY 2025 Change in YoY NIM | -12bps | -29bps | -14bps |
| FY 2025 Net Interest Income | $14.5 B | $9.15 B | $9.36 B |
| FY 2025 Change in YoY Net Interest Income | 1% | -6% | -3% |
| FY 2025 Non-Interest Income | $3.5 B | $5.46 B | $1.9 B |
| FY 2025 Change in YoY Non-Interest Income | -5% | 16% | -15% |
| Dividend (Total FY) | $3.06 / share | $0.99 /share | $1.81 / share |
| Change in YoY Dividend | 38% | -2% | -11.7% |
All banks reported mixed results. A mix of good and bad.
The good part? Singapore banks drew S$77 bil in new wealth from Asia’s rich.
As net interest margin (NIM) starts narrowing, dropping between 12 to 29 bps, the SG banks are leaning on the non-interest income to further boost their fairytale growth story. That shift towards more wealth and investment products boosted the banks’ wealth management fees (DBS: +29%, OCBC: +33%, UOB: +18%).
What’s more, most of the SG banks are looking to doubling down on their efforts to grow the wealth business.
The bad part? Net interest income is decelerating at a faster pace projected by analysts.
And the non interest income portion is not growing fast enough to buffer the declining net interest income.
How will share prices react in the upcoming periods?
Near term: More Volatility LIkely
In the near term, there would likely be more selling pressure due to a couple of reasons.
Some financial institutions and traders would see these results as a sign to take profit and leave the table. Although SG banks have had a great track record on relying on non interest income to weather through the swings of the interest rates, share prices are at a premium, and for those prioritising on realising gains, it is dumb not to do so when share prices are near historical highs.
Yes there is growth momentum in the wealth banking. But there is no signs or guarantees that it can go on and on. Interest rates regime are more transparent, and wealth banking can come to an abrupt halt if macroeconomic climates turned sour.
Mid Term: Uncertainty Reigns
In the mid term, it’s anyone’s game.
We are still very much in uncharted territory. Globally, AI is sending SaaS stocks up and down the hill. Whether AI can relieve me and you from working, and affect our mortgage and our car loan obligations, is a key question and concern.
And not to mention geopolitically, we are not in the very best shape. Might I remind you, we have a US government that has reacted and acted against laws for whatever justifications.
Where we are heading to in the mid term, is really unknown.
Long Term: Track Record Matters
In the long term, there is some clarity and a solid track record of the banks performing well.
As of now, it doesn’t look like AI can replace our boomer banking businesses. If anything, we have all experienced and observed how banks adopted tech to make banking much more efficient and seamless.
Imagine. Banks are no longer just about queueing up physically for banking transactions. Now most of it is done via our app. Even opening a new bank account does not require a physical visit. Banks can now agglomerate your insurances, CPF, stock holdings to give you a 360 degree view of how your wealth looks like, and provide a projection on whether if you are financially stable to weather through storms and eventually prepare for retirements.
It’s a walled garden that no one really talks about much. But ask yourself, each and everyone one of us have a bank where we make our major transactions, and there is no way we are drastically changing that unless something detrimental happens.
For that reason, the long term prospects of the banks should be even safer than your jobs (especially if it is currently showing signs of being replaceable by AI).
Verdict: Still the Terrific Trio
The traders and institutions might rotate their fund elsewhere, causing potential selloffs to happen over the next few weeks.
For long-term dividend and SG investors, this could be an opportunity to take advantage of.
Again, if you are waiting for a price to book ratio of 1.0x – 1.2x, you might need to wait longer. As for when the next crash coming, I do not have a crystal ball (or a Palantir) to tell me when’s that.
My views remain the same. While the world is bored with the Magnificent Seven right now, you shouldn’t be bored of our Singapore’s Terrific Trio, especially if you are in this for the very long run.
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