After years of robust growth, a tough 2027 ahead for Singapore banks: Analysts

DIVERGING PATHS?

Looking ahead to 2027, analysts also noted that the banks are not in equal positions.

“DBS has the steadiest outlook,” said Mr Cheng Chye Hsern, head of investment at Providend. The bank’s management said net interest income has bottomed out, with mid-single-digit growth of total income expected next year.

It has the highest profitability, but its share price is nearly three times its book value, compared with its historical average of 1.6 times.

Mr Xiao of CMC Markets said DBS and UOB have different reasons for missing analysts’ expectations.

For DBS, the shortfall came from markets trading income plunging 65 per cent, signalling a rough quarter on the desks rather than any deeper issues, he said.

However, UOB’s problem is harder to fix, he said: “Margins are thinner, and costs keep rising into 2027.”

OCBC said it expects loan growth to be in the low double digits for this year, and that it is well placed for higher rates. But its insurance arm, Great Eastern, will keep group earnings lumpier whenever bond markets move sharply, said Mr Cheng of Providend.