To The Moon

The combined weightage of $DBS(D05.SI)$ $UOB(U11.SI)$ $OCBC Bank(O39.SI)$ in the Straits Times Index (STI) increased from 39.6% at end-2019 to 55.0% in February 2025, before moderating to 51.6% at present, alongside average total returns of 175% over the same period.

DBS, OCBC have released 1Q26 financial results, with UOB providing 1Q26 performance highlights, with each reporting results above consensus estimates.

NOII Growth Driven by Wealth and Fee Income

Combined non‑interest income (NOII) for DBS, OCBC, and UOB rose to S$5.16 billion in 1Q26, up from S$4.00 billion in 4Q25 and S$4.78 billion in 1Q25, representing about 39% of combined total income. The S$5.16 was the highest combined NOII since 3Q25. 

MU Pic 1

NOII growth was broad‑based, reflecting stronger contributions from fee income, treasury customer sales, trading income, and insurance across the three banks. Fee income and wealth management were key drivers. DBS reported record fee income and treasury customer sales led by wealth management, while OCBC recorded double‑digit growth in wealth management fees and overall non‑interest income, with wealth, trading, and insurance contributing to a new high.

UOB similarly highlighted sustained momentum in fee income and strong customer treasury flows, supported by higher capital market activity and continued growth in wealth income. Across the three banks, non‑interest income reflects a more diversified earnings mix, with recurring fee streams and customer‑driven income supporting overall profitability. This includes wealth management, transaction services, and trading activities, which have helped offset the impact of lower interest rates and provide greater balance across revenue streams.

Stronger NII Base, Active Margin Management Amid Lower Rates

The trio have reported combined 1Q26 net interest income (NII) at S$8.04 billion, down from S$8.24 billion in 4Q25 quarter and S$8.44 billion in 1Q25. As illustrated in the table below, this was the fourteenth consecutive quarter of NII above S$8.0 billion. For context, combined NII back in 1Q15 was S$4.1 billion, and from 1Q18 through to 2Q22, combined quarterly NII was between S$5.0 billion and S$6.0 billion. 

MU Pic 2

As illustrated in the table above, Singapore’s SORA has declined since 2023. HIBOR is also lower over the period, while the US Fed funds rate has eased from its 2023–2024 peak. Lower interest rates compress loan yields and narrow net interest margins, weighing on net interest income, although the impact has been less linear in recent quarters.

This reflects how net interest margins are actively managed, with CFO disclosures highlighting the use of balance sheet, funding, and hedging levers to mitigate rate movements. DBS points to both hedging and deposit growth, noting that these mitigate rate headwinds and offset lower rates. DBS further notes that hedging actively reduces rate sensitivity and is managed across a range of strategies and instruments, including cross‑currency and basis swaps, with positioning adjusted as market conditions evolve. OCBC highlights balance sheet actions, including lower deposit costs, asset growth and an increase in income‑accretive assets to partly offset the decline. UOB emphasises funding cost management, with rate pressures moderated through funding discipline, alongside support from asset repricing and volume and mix.

Customer loans grew at a mid‑single‑digit pace from 1Q25 to 1Q26, with stronger expansion on a constant‑currency basis. DBS reported loan growth of 6% year‑on‑year in constant currency, while OCBC reported 9% year‑on‑year growth in constant currency. UOB reported 4% year‑on‑year growth on a reported basis. Growth was broad‑based, with DBS highlighting expansion in non‑trade corporate and consumer loans, and OCBC noting growth across geographies and sectors. UOB similarly reported steady growth supported by retail and wholesale banking. Across the three banks, loan growth was supported by resilient pipelines and ongoing deposit inflows, with CASA growth continuing to support balance sheet expansion.

NPL Ratios Unchanged as Asset Quality Remains Stable

Banks’ asset quality remained stable in 1Q26, with NPL ratios unchanged from 4Q25 across the trio. DBS reported its non-Performing Loans (NPL) ratio at 1.0%, with new non‑performing asset formation remaining low and more than offset by repayments and write‑offs. OCBC similarly maintained its NPL ratio at 0.9%, marking the eighth consecutive quarter at this level, with new corporate non-performing assets (NPA) formation lower and offset by recoveries and upgrades, alongside total NPA coverage rising to 163%. UOB reported its NPL ratio at 1.5%, unchanged quarter‑on‑quarter, with asset quality supported by stable credit metrics and disciplined provisioning, with performing loans coverage maintained at 1.0% and NPA coverage at 100% (272% after collateral). 

Guidance Anchored by Balance Sheet Discipline and Fee Growth 

Across the three banks, FY26 guidance reflects a common focus on balancing rate headwinds with funding discipline, asset mix, and continued growth in fee‑driven income. Management commentary emphasises resilient balance sheets, stable funding and the role of wealth, treasury, and transaction income in supporting total income as interest margins moderate.

DBS guides for total income to be around FY25 levels, with the impact of lower rates on net interest income largely mitigated through deposit growth, hedging opportunities and balance sheet positioning. Management expects high single‑digit growth in non‑interest income, supported by wealth management and transaction services, alongside continued cost discipline with cost‑income ratio in the low‑40% range.

OCBC similarly maintains its FY26 targets, with total income stable to growing and a slight to moderate decline in net interest income, alongside mid‑single‑digit loan growth and credit costs of 20-25 basis points. Management also guides for a low‑to‑mid 40% cost‑income ratio and a 50% ordinary dividend payout ratio, supported by a strong balance sheet and capital position. 

UOB maintains its FY26 outlook with low single‑digit loan growth, net interest margins of 1.75% to 1.80%, high single‑digit fee income growth and credit costs of 25-30 basis points, alongside continued emphasis on funding discipline and fee‑led growth through wealth and customer treasury flows.

😍 Been eyeing Tiger merch but short on Tiger Coins? Now's your chance.

🎁 We’ve selected 4 high-demand items across practial, lifestyle, and learning, now with a lower redemption threshold!

Hot Merch Returns · Up to 43% Off