Singapore banks are bracing for a challenging period as share prices have reached their peak, and downside risks to earnings are anticipated, according to a DBS Group Research note.
The report highlights that even if trade tensions de-escalate, the banks may still face potential downgrades in guidance whilst maintaining their dividend commitments.
The report provides a preview of the first quarter of 2025, indicating mixed net interest margins (NIMs) but strong performance in wealth fees and trading income. However, it advises caution regarding provisions. The analysis suggests a lack of catalysts for growth, prompting a recommendation to maintain a “HOLD” position on Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB), with dividend yields expected to cap any downside.
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