In the latest trading session, Singapore’s three major banks, DBS, OCBC, and UOB, all witnessed record high closures. Spearheading gains on the Straits Times Index, OCBC saw a 3.3% rise, closing at S$26.34 (US$20.39). UOB climbed 2.9% to S$41.69, and DBS increased by 2.6%, closing at S$68.64.
DBS was singled out as a preferred local bank in a recent research note by Citi. The choice was based on the bank’s strong dividend per share visibility and its position as a distinguished Asia wealth proxy. OCBC received a “buy” rating, with Citi concurring that the bank should continue its growth and lessen the return on equity gap with DBS.
Contrarily, UOB maintained a “neutral” rating. The bank’s wealth and loan-growth trajectories reportedly trail those of its peers, while its earnings forecasts align strictly with market expectations.
The Straits Times Index ended Tuesday with a 1.57% increase, closing at 5,342.240.
On Wednesday, UOB reached a fifth consecutive record intraday high, increasing by 4.65% to S$43.63 by midday, after touching S$43.79 earlier in the session. DBS and OCBC also experienced growth, with DBS rising 1.5% to S$69.67 and OCBC climbing 2.9% to S$27.10.
Investment bank Macquarie Capital upgraded DBS and UOB from “neutral” to “outperform.” The target price for DBS was raised from S$52.38 to S$70.86, and UOB’s target price increased from S$36.78 to S$45.16. Macquarie Capital also retained its “outperform” rating on OCBC, boosting its target price from S$24.25 to S$27.76.
Jayden Vantarakis, head of Asean equity research at Macquarie Capital, suggested that further re-rating is still possible, supported by an improved sector outlook where both net interest income and non-interest income can grow simultaneously, whilst the Singapore dollar remains a preferred currency amidst broad U.S. dollar strength.
What led to the record high closures of Singapore’s three major banks?
Dividend per share visibility and Asia wealth proxy positioning were among the reasons for the banks’ record high closures. Also, they are expected to maintain growth, and the Singapore dollar remains strong amidst broad U.S. dollar strength.
How did Citi rate the three major banks?
Citi gave DBS a preferred local bank pick with a “buy” rating. OCBC also received a “buy” rating, while UOB retained a “neutral” rating.
What is the potential for further re-rating according to Macquarie Capital?
Macquarie Capital suggests that further re-rating is still possible, supported by an improved sector outlook where net interest income and non-interest income are expected to grow simultaneously.
