UOB’s third-quarter results missed expectations due to large provisions for commercial real estate. The bank’s net profit of $443 million was down 67% q-o-q and 72% y-o-y.
Allowances rose from $279 million in 2QFY2025 to $1,361 million in 3QFY2025. Management explained that this was a pre-emptive move to strengthen its provision coverage.
A provision of $615 million was due to commercial real estate risks in the US and Greater China. The non-performing loan (NPL) ratio remained relatively unchanged at 1.6%.
UOB’s net interest margin (NIM) of 1.82% in 3QFY2025 was down from 1.92% in 2QFY2025. UOB is guiding for full-year NIM to come in between 1.75% to 1.8%.
See also: UOB reports lower 3QFY2025 earnings after making 'pre-emptive' provisions
UOB’s non-interest income was relatively flat at $1.1 billion in 3QFY2025. However, fee income rose 8% q-o-q to $892 million in 3QFY2025. This brought 9M2025 fee income to $2,616 million, up 10% y-o-y.
Of this, the wealth segment delivered the highest growth of 19% to $619 million, or 24% of total non-interest income. The credit card segment is the top contributor and accounted for 33% of total non-interest income. UOB’s wealth business saw net new money of $5 billion during the quarter.
Management is expecting credit costs to normalise after this quarter’s provisions, and re-iterated that there is no change to its dividend policy, which is still based on 50% of earnings. For FY2026, UOB is guiding for low-single-digit loan growth.
See also: DBS 3QFY2025 earnings down 2% y-o-y to $2.95 billion but beat expectations
“While the global outlook is still mixed, risk assets have done well globally this year which have led to better investment and fee income,” notes OCBC’s Lee. “Asia has proven to be relatively resilient despite higher trade tariffs… Overall, we remain fairly optimistic about the outlook for this region. UOB’s regional footprint should enable it to tap on regional trades and cross-sell more investment products to its growing clientele base.”
Lee’s fair value estimate on UOB remains unchanged at $38.20. UOB declares dividends twice a year.
DBS’s dividend plans
DBS, meanwhile, declares dividends quarterly. For DBS, Lee notes that management has declared a total payout of 75 cents per share for 3QFY2025, comprising an ordinary dividend of 60 cents and a capital return dividend of 15 cents.
The stock will trade ex-dividend on Nov 13 and payment will be on Nov 24.
DBS previously committed to a total capital return of $8 billion, of which $3 billion has been allocated for share buybacks over two to three years. To date, DBS has used up almost 12% for the share buyback programme. The balance of $5 billion will be distributed via dividends.
Management also says a 6-cent step-up dividend is likely to be proposed in 4QFY2025 and will be implemented in FY2026. This effectively means that FY2026 dividends will comprise a normal dividend of 60 cents per quarter; a capital return dividend of 15 cents per quarter till end-2027; and a step-up dividend of 6 cents per quarter. This translates to a total of 81 cents per quarter in FY2026.
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Hence, Lee thinks DBS’s “attractive dividend yield will continue to provide price support”, despite the bank’s stock hitting an all-time high of $55.55 on Nov 6 following the release of the results.
This is above Lee’s upgraded target price of $55, up from $54 previously.
During the quarter, DBS generated a record pre-tax profit of $3.48 billion, up 1% y-o-y. Total income was up 3% y-o-y to new high of $5.93 billion.
While NIM came off from 2.05% in 2QFY2025 to 1.96% in 3QFY2025, net interest income remained healthy at $3.58 billion, notes Lee. This was due to strong deposit growth and proactive balance sheet hedging.
In addition, fee income and treasury customer sales reached new highs, leading to record high non-interest income.
Wealth management led non-interest income growth with total income of $2.17 billion for 9M2025, up 30% y-o-y, and accounted for 48% of total non-interest income.
DBS’s cards segment was the second-largest contributor at 20% of total non-interest income.
For 9M2025, total income rose 5% to a new high of $17.6 billion.
DBS’s NPL ratio was stable at 1.0%, while specific provisions were at 15 basis points (bps) during the quarter. According to management, specific provisions will normalise to 17-20 bps, with potential for general provisions writebacks.
DBS’s management is guiding for FY2026 total income to be around FY2025 levels despite rate headwinds. Based on the softer rates outlook, DBS is expecting three US Federal Reserve rate cuts in 2026 and it expects FY2026 net interest income to come in slightly below FY2025. However, this will be mitigated by deposit growth.
OCBC will follow by releasing its third-quarter results before market opens on Nov 7.
DBS shares closed $2.04 higher, or 3.8% up, at $55.54 on Nov 6; while UOB shares closed 97 cents lower, or 2.8% down, at $33.90.
DBS shares have gained some 26% year to date, while UOB has fallen around 7%.
