Its favourite is DBS because the bank continues to deliver “sector-leading ROE, and the quantum of excess capital (stock and flow) as well as management’s willingness to pay that out is a multi-year edge. Hence, we expect dividend yield and cost of equity compression for DBS to drive a re-rating over the course of the year.”
UOB’s share price was under pressure in November and December following the announcement that it pre-emptively set aside $3615 million in general allowances during its 3Q2025 results announcement in November 2025 to strengthen “its balance sheet against headwinds in the US and Greater China (GC) commercial real estate (CRE) sectors”.
“The main focus for investors during our discussion was on credit costs post higher NPL formation (GC/US CRE, as well as Thailand) and re-architecting the wealth management/ private banking offering,” JP Morgan says of UOB.
UOB’s top management guided 25-30 bps credit costs for 4Q2025 and 2026. JP Morgan’s estimates are 32-33 bps.
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“The bank appears to have looked ahead in terms of credit risks during the 3Q2025 review, so that incremental NPL formation moves closer to 25-30bps range. Overall, we came back less worried on UOB, and hence see the stock holding better than OCBC into 4Q2025 results,” JP Morgan says.
It has a price target of $70 for DBS by end-2026, and $34 for UOB. UOB closed at $36.01 on Jan 8.
