In a report dated July 16, JP Morgan dampened animal spirits among local banks. It is recommending that investors trim OCBC and UOB. “UOB remains our highest conviction underweight in the sector on asset quality risks, especially those linked to Greater China commercial real estate (CRE) loans. OCBC and DBS risks are more valuation-related, with China’s overseas direct investment-related rules a possible catalyst for a sharper correction. Singapore Exchange remains one of the best flow-led stocks to own. We expect positive guidance and a shift in dividend policy at the bourse,” JP Morgan says.
A Bloomberg poll of analysts’ estimates of local banks’ earnings for 2QFY2026 shows stability rather than growth (See Table 1). Based on forecasts as of July 13, DBS Group Holdings is expected to report a net profit of $2.86 billion in 2QFY2026, which should enable it to pip its FY2025 net profit of $10.9 billion to regain the $11 billion mark. Oversea-Chinese Banking Corp’s (OCBC) 2QFY2026 net profit estimate of $1.81 billion appears somewhat conservative, given its wealth management initiatives. The Street’s forecast for United Overseas Bank (UOB) is $1.49 billion.
Despite forecasts of negative q-o-q changes, bank shares have risen to new highs, prompting market watchers to comment that banks have never performed this way in the past 40 years.
