Singapore banks 4Q25 preview – relative value plays in focus
🐰🐢While DBS is extending its outstanding share price performance from 2025, its peer UOB and OCBC are playing catch-up, fast.
💫Last Friday, OCBC and UOB touched new record highs. Both stocks have rallied 25% and 14% respectively over the last 12 weeks – and are amongst the top STI index gainers over the last 3 months - to catch up with DBS’ +29% gain in 2025.
🔝Consequently, OCBC and UOB call warrants have emerged amongst the top warrant gainers over the last 12 weeks with returns of +278.9% and 94.6% while a OCBC put warrant which fell 96.7% over this period, is the second worst performing warrant over the past 12 weeks
🗓How will the stocks move ahead of their upcoming earnings starting with DBS on 9 February 2026?
📝Macquarie Research (MQ) offers their view of the Singapore banks ahead of their fourth quarter earnings
👀Read more for the full article containing excerpts of MQ’s 21 January 2026 report and important disclaimers
Key points
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Headwinds for UOB should abate this earnings season and MQ sees potential for a relative-value catch up play. MQ upgrades the stock to Outperform into results.
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Seasonal trends are a headwind for non-interest income. Lower rates are a double-edged sword, pressuring revenues in 2026 but benefiting valuations.
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MQ’s pecking order moves to UOB (Outperform) > OCBC (Outperform) > DBS (Underperform)
Interest rates - continued downward path. SORA-3month came in lower at 1.29% average for the quarter (around 44bps vs 3Q25 average), and slightly below MQ’s forecast. MQ continues to see further weakness ahead based on SGD strength (USD weakness) and expect sub 1.0% by mid-2026. MQ expects relative net interest margin (NIM) stability this quarter (around 3bps on average) as funding repricing benefits, before further declines in 26e on lower asset yields.
Loan volumes picked up. The latest MAS banking industry stats (Nov-25) show a sustained pickup in lending, with 5.7% year-on-year (YoY) system growth. Full year FY25 GDP for Singapore was also strong at 4.8% YoY. Whilst MQ expects some slowdown in 2026 to reflect front-loading impacts for manufacturing and exports, this sets a positive base for 26e loan momentum (MQ expects 4% average for the 3 banks).
Seasonal fee income and other Non-Interest Income trends. Over the past 5 years, fee trends have been most pronounced for DBS (8% lower vs the 1Q-3Q trend) and all three banks experience lower trading and other Non-Interest Income (25% lower in 4Q than 1Q-3Q, on average). This affects MQ’s quarter-on-quarter (QoQ) momentum for PATMI in 4Q25e, though UOB benefits from a lower 3Q25 base
Asset quality - normalisation for UOB the key. After taking large one-off provisions in 3Q, MQ expects UOB's quarterly provisions to normalise. Whilst there remain risks around Hong Kong commercial real estate, the bank has topped up allowances and rate movements should have been marginally supportive of collateral values. Consensus estimates for DBS' 4Q25 credit charge appear very low at 10bps annualised
Readthrough from the US majors. The 6 major US banks reported earnings over the past week, with a divergence in performance. Overall wealth assets declined by 2% QoQ (2 out of 6 banks had growth). Loan growth accelerated (+9% YoY) and asset quality improved (11% lower credit charge QoQ). Trading income was seasonally soft, -26% QoQ. MQ expects the Singapore banks to do better on wealth AUM inflows, but other trends to be similar
Upgrading UOB, MQ’s pecking order moves to UOB (OP) > OCBC (OP) > DBS (UP). MQ raises their price targets 15% (average) to reflect a lower equity risk premium (5.8% vs 7.3% prior) as the sector benefits from its relative 'safe haven' status. Still, MQ sees lacklustre earnings growth in 2026 as a headwind
DBS: Underperform rating; 12-month target price of $50.00 based on a Price-to-Book stock methodology.
OCBC: Outperform rating; 12-month target price of $21.50 based on a Price-to-Book stock methodology.
UOB: Outperform rating; 12-month target price of $41.00 based on a Gordon Growth Model stock methodology.
Note:Macquarie Research is independent from the Warrants business, what the Macquarie Warrants desks quote from Macquarie Research may not reflect the complete analysis of Macquarie Research on the relevant company over time.
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Macquarie has trending call and put warrants on tight spreads and high liquidity tracking the three banks. Investors keen to capitalise on the volatility of the Singapore bank shares may wish to consider using them to do so.Interested investors can use the Exposure Simulator tool to estimate the warrant price performance of any of the warrants based on your target exit levels in the stocks.
Trending DBS call $DBS MB eCW260730(FQCW.SI)$ : https://warrants.com.sg/tools/exposuresimulator/FQCW
Trending DBS put $DBS MB ePW260630(RBFW.SI)$ : https://warrants.com.sg/tools/exposuresimulator/RBFW
Trending OCBC call $OCBC Bk MB eCW260730(UCFW.SI)$ : https://warrants.com.sg/tools/exposuresimulator/UCFW
Trending OCBC put $OCBC Bk MB ePW260730(KTZW.SI)$ : https://warrants.com.sg/tools/exposuresimulator/KTZW
Trending UOB call $UOB MB eCW260730(HIQW.SI)$ : https://warrants.com.sg/tools/exposuresimulator/HIQW
Trending UOB put UCCW: https://warrants.com.sg/tools/exposuresimulator/UCCW
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