To The Moon

• While broad indices have been shaky as a result of soaring yields, the three local banks have been quietly extending gains

• This month, Singapore banks have continued to trend higher, with $UOB(U11.SI)$ making the strongest moves of the three with a 4.2% increase

• Subsequently, two of UOB call warrants are amongst the top three warrant performers this month-to-date as of yesterday’s close

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  UOB’s outperformance against the backdrop of rising rates may be due to the fact that it benefits most from rising rates in Singapore

• According to Macquarie Research (MQ), UOB’s net interest income taking up 66% of its revenue mix compared to around 58% for its two peers

• Find out more on what MQ has to say about UOB in a research report published on 16 September 2026, as well as important disclaimers:

Key points​​​​​​​

• UOB's P/B-relative remains at around half versus DBS and OCBC. MQ analyses key short-term and structural issues the group needs to surmount to close the gap

• Stabilising asset quality and accelerating wealth are important near term. Structural issues include sub-scale operations in ASEAN-4

• MQ has a non-consensus Outperform rating on UOB and more upside versus DBS and OCBC at 17% versus 8% for peers, including expected dividends

Greater China Commercial Real Estate – Better late than never. UOB updated its equity presentation deck (link) this month to show stage-2 HK CRE loan exposure. Based on UOB's updated disclosures, MQ estimates each 10% collateral value reduction drives S$181 million higher provisions, and any slippage from special mention to non performing loan drives S$100 million provisions. The bank has a handy S$345 million in excess provisions in its US branch it can shift across to cover these risks.

Wealth investment continues. UOB's target is set to double wealth income from S$1.28 billion in 2025 to around S$2.5 billion levels by 2030. Although UOB's wealth fee growth has been slower in percentage terms than peers in recent quarters, the base is relatively low and provides an easier runway for improvement.

Rising SORA – most exposed. All three Singaporean banks benefit from improved SGD rates, though UOB is the most exposed with 43% of loans in its home market currency, vs 37-38% for DBS and OCBC. The bank also earns more Net Interest Income in its revenue mix, at 66% versus around 58% for its two major peers.

Structural Return to Total Equity issues. Exposure to ASEAN-4 markets with a focus on mass-affluent credit card holders embeds a higher level of Cost/Income. Following real-estate divestment and selling UOB Asset Management, there remain small stakes in Wee family group companies that weigh on returns for minority shareholders as well

Earnings changes: MQ makes no changes. MQ recently reviewed their estimates following 2Q26 reporting.

Valuation: MQ’s unchanged 12-month share price target of S$46.57 (based on a Gordon Growth Model stock methodology) assumes a 12.0% Return to Total Equity, 2.5% growth and 8.5% cost of equity

Catalysts: Quarterly disclosures showing ongoing CRE stabilisation (alongside any HK property data points), ongoing share buyback deployment, CEO succession (though timing remains uncertain).

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 Warrants has call and put warrants tracking UOB that vary in tenure, effective gearing (how much the warrant moves for a 1% move in UOB shares), and time decay.

Warrant investors who wish to take a longer view over the three Singapore banks may consider the longest dated warrants to reduce their holding cost of warrants, while those seeking higher leverage can consider the short-dated warrants.

The Warrant Selector provides an estimation on the price performance of the various UOB call/put warrants quoted on tight spreads, based on an investor’s target entry and exit price of UOB shares.

List of UOB warrants on tight spreads:

9R7W

$UOB MB eCW270226(YUZW.SI)$

$UOB MB eCW261230(9R4W.SI)$

YV0W

$UOB MB ePW270930(VB4W.SI)$