Oversea-Chinese Banking Corp is trading at the same price/book levels as HSBC and Wells Fargo. Yet OCBC’s yield is higher than Wells Fargo’s.
United Overseas Bank is trading at similar price/book levels as Bank of America. And once again, the local lender has announced attractive capital management initiatives.
At two times book, OCBC would be at $26, and UOB would be at $56. But of course, this could be a pipe dream. As analysts point out, growth is likely to be tepid.
Not much growth
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Bloomberg’s earnings estimate has DBS reporting a net profit of $2.6 billion in 4Q2025, putting its full year net profit comfortably above $10 billion at $11.375 billion. In FY2024, DBS reported a net profit of $11.289 billion, and a 4Q2024 net profit of $2.522 billion.
OCBC’s estimated net profit in 4Q2025 is expected to come in at $1.645 billion translating into a full year 2025 net profit of $7.4 billion, a tad below the $7.587 billion recorded in FY2024. Its 4Q net profit is marginally lower than 4Q2024’s level of $1.687 billion.
Looking forward, DBS is likely to record a net profit growth of 1.7% to $11.574 billion in FY2026. OCBC is forecast to record profit growth of 1.1% to $7.482 billion. Only UOB is likely to experience a jump to $5.72 billion in FY2026 because it set aside pre-emptive allowances of $615 million in 3Q2025. Even then, UOB only returns to 2024 levels of $6.1 billion in 2027.
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Concerns on asset quality
Jayden Vantarakis, the banking analyst at Macquarie says he expects UOB’s quarterly provisions to normalise after taking large one-off provisions in 3Q2025 for US and Hong Kong commercial real estate (CRE).
“Whilst there remain risks around Hong Kong CRE, the bank has topped up allowances and rate movements should have been marginally supportive of collateral values. Consensus estimates for DBS' 4Q2025 credit charge appear very low at 10bps annualised,” writes Vantarakis, who has upgraded UOB to outperform ahead of OCBC which is also rated outperform. Interestingly, DBS is an undeperform for him.
Jonathan Koh, an analyst at UOB Kay Hian has DBS as his top pick. “We expect DBS to weather the usual seasonal weakness and forecast net profit to be flat y-o-y but decline 15% q-o-q to $2,523 million in 4Q2025,” Koh says in his report.
According to court filings, DBS has exposure of $95 million to Autobahn Rent A Car. “The new NPL could fall within DBS’ NPL formation of $150 million to $350 million per quarter on a business-as-usual basis. “We expect total provisions of $201 million and credit cost of 18bp in 4Q2025 (2024: 14bp). DBS has accumulated ample management overlay for general provisions of $2.5 billion,” Koh writes.
He expects a step-up in DBS’s quarterly dividend by six cents to 66 cents, and for DBS to maintain the capital return dividend at 15 cents, translating into a dividend of 81 cents in 4Q2025.
All will be revealed when DBS reports its 4Q2025 and FY2025 results on Feb 9. UOB reports on Feb 24 and OCBC on Feb 25. For those who are interested, Great Eastern Holdings will report on Feb 24 as well. Investors in GEH would be looking out for the life insurer’s net profit, dividends, embedded value and comprehensive equity.
