To The Moon

• The three local banks surged to all-time highs this month, driven by a wave of analyst upgrades and pre-earnings optimism - with the trio outperforming the STI by a wide margin and DBS crossing S$200 billion in market cap for the first time (Business Times)

• Consequently, call warrants tracking the three banks are amongst the top 10 warrant gainers this month-to-date, moving 9 to 20 times more than their respective bank shares which have rallied as much as 10% this month

• Put warrants tracking all three banks on the other hand, are also amongst the top losers this month-to-date with losses up to 87% 

• Macquarie Warrants Singapore has listed new put warrants over all there banks this morning – interested investors can find out more information on them within the article

• Macquarie Research (MQ) is amongst the analysts who have updated some of the Singapore banks in their latest report published on 7 July 2026

• Read more for the full article containing excerpts of MQ’s report, as well as important disclaimers

Key points

• Modestly rising SGD rates should support growth in both net interest and non-interest income

• For 2Q26, MQ is ahead of consensus for all three banks, seeing scope for fee income beats, and possible further upside from contained provisions

• MQ is turning more bullish on the sector, upgrading DBS and UOB to Outperform, joining OCBC. In terms of upside, MQ’s pecking order moves to UOB > OCBC > DBS).

For 2Q26, MQ anticipates 4% YoY growth in pre-provision operating profit (PPOP) and net profit (NPAT), with non-interest income materially higher YoY. MQ is 3-4% ahead of Visible Alpha consensus, led primarily by fee income (6% ahead). The macro backdrop has improved relative to end 1Q26 and there is scope for credit charges to be at the lower end of guidance (though MQ does not expect writebacks yet).

SORA outlook more bullish. USD strength followed by US Fed hikes are positive for SGD rates. In the near term, the gap between SORA (SGD) and SOFR (USD) could modestly decrease, followed by transmission of US Fed rate hikes to SGD rates. MQ now projects around 71bps of SGD rate increases from 2Q26 lows over the next 12 months, to 1.77%.

Rising loan volume momentum. MQ continues to project mid-single-digit loan growth for the banks; however, trends in their home market have been strong. As in other markets, working capital utilisation in Singapore appears to have increased since the onset of the Middle East conflict in March, as businesses built inventory in anticipation of higher costs. Total loan growth reached 9% year on year as of May 2026 (excluding financial institutions loans). The banks have 44-60% of their loan portfolios in Singapore, with DBS most exposed and OCBC least.

Recent commentary from MQ’s ASEAN banks tour was upbeat, with ongoing wealth momentum and UOB outlining plans to improve performance. Risks stemming from cross-border securities trade affecting onshore China brokers is seen as manageable, but the banks are unsure if this is the start of a bigger push. The banks noted no concerns on asset quality.

Dividends set for this quarter. OCBC and UOB should pay around 50% of 1H26 earnings; DBS' quarterly dividend pre-calibrated to 81cents/share (66cents ordinary + 15cents capital return). Medium term, capital management options are rising, with MQ’s estimate that current payouts support 7-10% loan growth.

Upgrade DBS and UOB to Outperform (from Neutral). MQ’s revised pecking order is UOB > OCBC > DBS. MQ raises their 2026-28 earnings per share estimates by an average of 1%/6%/7%, led by their revised interest rate path. MQ has also increased the growth expectations in their valuation models to 2.5-3.0% from 1%. Together with higher return on tangible equity projections, this lifts MQ’s target prices 24% on average

DBS: Outperform, 12-month target price of $70.86 based on a Price to Book stock methodology

OCBC: Outperform, 12-month target price of $27.76 based on a Gordon Growth Model stock methodology

UOB: Outperform, 12-month target price of $45.16 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 call and put warrants tracking all three banks, allowing investors to capitalise on the volatility of the bank shares.

The trending warrants, which include this morning’s newly listed put warrants, are priced around $0.067 to $0.250 and will move approximately 6 times more than the bank shares, based on their effective gearing levels as of 9AM today.

The trending warrants are selected based on their gearing, liquidity, sensitivity, and tighter bid-ask spreads.

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 EKSW: https://warrants.com.sg/tools/exposuresimulator/EKSW

Trending DBS put $DBS MB ePW270226(V1RW.SI)$ : https://warrants.com.sg/tools/exposuresimulator/V1RW

Trending OCBC call $OCBC Bk MB eCW261230(99HW.SI)$ : https://warrants.com.sg/tools/exposuresimulator/99HW

Trending OCBC put $OCBC Bk MB ePW270226(92WW.SI)$ : https://warrants.com.sg/tools/exposuresimulator/92WW

Trending UOB call $UOB MB eCW261230(9R4W.SI)$ : https://warrants.com.sg/tools/exposuresimulator/9R4W

Trending UOB put $UOB MB ePW270226(YV0W.SI)$ : https://warrants.com.sg/tools/exposuresimulator/YV0W