Morningstar has announced a reduction in the uncertainty ratings for Singapore’s major banks, including DBS Group Holdings, Oversea-Chinese Banking Corporation (OCBC), and United Overseas Bank (UOB), from Medium to Low. This change follows a reassessment of risks associated with US import tariffs, which have now eased, according to Michael Makdad, Senior Equity Analyst at Morningstar.
The decision to lower the ratings comes after a period of heightened concern earlier in 2025, when the ratings were temporarily increased due to tariff-related uncertainties. The recent stability in share price volatility has also contributed to the decision to restore the Low rating. In contrast, HSBC and Standard Chartered, which were also affected by the tariff concerns, have seen their ratings adjusted back to Medium from High.
The implications of this adjustment are significant for investors. OCBC, which is currently trading at a 10% discount to its fair value estimate of SGD 18.50 ($___), is expected to move into 4-star territory under the new rating. Meanwhile, DBS Group and UOB are trading at 5% above and 7% below their fair value estimates of SGD 48 ($___) and SGD 38 ($___), respectively.
This development is expected to influence investor sentiment positively, as the reduction in uncertainty ratings suggests a more stable outlook for Singapore’s banking sector. The reassessment reflects Morningstar’s confidence in the banks’ ability to navigate the current economic landscape with reduced external risks.
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