“Wealth management income had already been growing strongly since 2022 without triggering a sustained re-rating. Notably, a Sept 2025 SCMP report flagged that Chinese family office applications to Singapore had already dropped some 50% versus 2022 peak, yet the banks posted record wealth management income through 2025 and into 1Q2026. DBS also recently discussed how 30% or less of the net new money flows in recent quarters came from China,” UBS points out.
Using equity risk premium (ERP) and cost of equity (COE) for Singapore banks and SGX, UBS estimates that DBS sits at 180 basis points (bps), OCBC at 160 bps, and UOB at 60b bps versus SGX at 100 bps. (ERP is the excess return investors demand for holding stocks over risk-free assets.)
Using SGX as a proxy for the pure market-reform component, UBS expects some compression in DBS & OCBC of 80-100 bps due to a moderation in wealth management flows. UOB has little wealth management premium embedded, UBS adds.
Impact on DBS
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According to UBS’s calculations, DBS's business is divided into two main segments: a high-ROE segment generating 45% ROE on 20% of allocated capital, and the rest of the business generating 9% ROE on the remaining 80%. The blend produced the reported group ROE of 16.2% in 2025.
For DBS, under a base case of 15% growth in the high-ROE segment and 5% elsewhere, group ROE improves to 16.7% in 2026. If wealth management moderates to 10% growth with the rest unchanged, group ROE still improves to 16.5%, UBS estimates. This model suggests a modest 2-10% share price impact even if growth for the high ROE business slows by a third.
“The share price risk is about the multiple being paid for the speed of improvement, not whether improvement occurs at all. A moderation in wealth management growth could compress the multiple modestly rather than undermine the fundamental investment case,” UBS concludes.
