UOB group CEO Wee Ee Cheong says at the result briefing on Nov 6 that there is no change to its policy of 50% dividend payout. “Our 2025 final dividend will not, let me emphasise, will not be impacted by this preemptive general allowance,” says Wee, who is also the bank’s largest shareholder.
UOB pays dividends semi-annually. The next dividend for FY2025 is expected to be announced in the second half of February 2026.
DBS announced a net profit of $2.95 billion in 3QFY2025, down 2% y-o-y, but up 5% q-o-q. The local banks were pressured by the decline in three-month compounded Sora, which has fallen from 3.07% at the end of last year to 1.4571% as at end-September. The decline continued through October, with the three-month compounded Sora at 1.2978% as of Nov 6. As a result, the net interest margins (NIMs) of the local banks have inched lower every quarter this year.
Chng Sok Hui, group CFO at DBS, explains that strong deposit growth and proactive balance sheet hedging, coupled with fee income led by wealth management and loans, treasury customer sales at new highs and markets trading income, mitigated the impact of lower interest rates and NIM pressure.
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What about DBS’s dividends and capital return programme? DBS has announced it will return $8 billion to shareholders from FY2025 to FY2027.
CEO Tan Su Shan explains: “We’ve always said that we had $8 billion of excess capital to return. We remain committed to returning that. That $3 billion was allocated to share buybacks. We’ve done about 12% of that. Our philosophy is to buy when the market is bad. The $5 billion is to be returned to shareholders through capital returns and dividends. We have various tools in our toolbox to pay our shareholders back. You’ve got your normal dividend, you’ve got the step-up dividend, capital returns dividend, and the share buyback. Based on that, we intend to keep to that $8 billion commitment.”
Chng adds that DBS will be able to increase ordinary dividends by six cents, which means paying an ordinary dividend of 66 cents per quarter, or an additional 24 cents per year from 4QFY2025.
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“We will get it approved at the AGM in March 2026, and then it will actually flow through. So, the step up is to 66 cents a quarter and you still have your 15 cents on the capital return dividend, which we have committed up to FY2027,” Chng says.
Based on DBS’s current $3 in full-year dividends, comprising 60 cents ordinary dividend and 15 cents capital return per quarter, the dividend yield works out at 5.4%. In FY2027, when the dividend rises to 81 cents per quarter, the dividend yield is approximately 5.8%.
Wealth management, treasury sales, structural shifts
Dividends aren’t plucked out of thin air. The Trump administration is pressuring the US Federal Reserve to cut the Federal funds rate (FFR). In October, the Fed cut rates by 25 basis points (bps) to 3.75%–4%. Yields on 10-year US Treasuries remain stubbornly above 4%.
Nonetheless, DBS is prepared for a lower interest rate environment. Tan discusses structural and cyclical drivers of growth during the results briefing on Nov 6. She sees the stock market’s strong performance since Liberation Day in April as cyclical. “Stock markets and money supply are up. These are cyclical,” Tan says.
Structural change refers to a shift in the fundamental way the economy operates or a long-term shift in the economic outlook. Tan cites demographics and wealth. Rising affluence and the rise of a middle class across Asean is a structural demographic shift.
Tan spoke at length about structural growth opportunities for DBS in wealth, including changes in global wealth structures from digital assets and the Genius Act.
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“The wealth management theme remains, such as structural growth for Asia and the rest of the world, and for the US, particularly. The structural growth in financial institutions group (FIG) assets and fund management — these are our clients. They’ve seen trillions of dollars in asset growth,” Tan says.
Digital assets could be another structural tailwind for DBS. As Tan sees it, the Genius Act in the US changed perceptions. Genius stands for the Guiding and Establishing National Innovation for US Stablecoins Act. This act requires stablecoins to be backed one-for-one by US dollars or other low-risk assets.
“We are still waiting to see how regulations turn out, because different regulators have different priorities and different timelines. This quarter, we tokenised structured notes on the Ethereum blockchain. We’re also working with Ripple to use Ripple’s digital currency. We’re pretty active in the tokenised ecosystem. We’ve been tokenising deposits and that’s also seeing a lot of customer interest, and we’re looking at the potential for repo and collateralised use cases as well as tokenised money market funds,” Tan elaborates. Repo stands for a repurchase agreement, which is a form of secured short-term borrowing, usually, though not always, using government securities as collateral.
Tan also described how DBS could further its growth in the next few years. She is guiding for FY2026’s net profit to remain in the $10 billion–$11 billion range, slightly lower than FY2025’s net profit because of higher tax expense.
“I’ve been travelling quite a fair bit, for the IMF (International Monetary Fund) board meetings in Washington, to meet the HKMA (Hong Kong Monetary Authority) regulators, to visit my colleagues in China and Taiwan. I will be in India next week. There’s a lot of momentum in deal flow and in the US, and certainly in the whole tokenised stablecoin-digital asset ecosystem. Outside the US, there is a lot of momentum in terms of potential trade flows because customers want to diversify their supply chain. Customers are looking for new markets to grow. This shift in trade and investment flows is something that our team is very focused on, and we’re looking at growing the pipeline, in intra-regional trade between Asian countries, Asean countries, China to Asean countries, the upscaling of the China agreements that most countries in Asean have is also being put in place,” Tan describes.
She expects DBS to capitalise on these structural shifts in global macro flows and the pipeline of IPO deals in Hong Kong, China, and Singapore. “I was struck also by the concentration of the market cap of the US. The US still is about 70% of global market capitalisation,” Tan says and is looking for Singapore to catch up.
Renminbi internationalisation for trade flows and the revitalisation of the Chinese market in the wake of AI are also themes for DBS’s growth, she adds.
UOB to focus on Asean
These regional themes are also themes UOB has articulated. Asean connectivity, and trade and investment flows between North Asia and Asean are structural themes that the bank has been a conduit and intermediary of.
However, Leong Yung Chee, UOB’s group CFO, explains that the non-performing loan recoveries in commercial real estate in Hong Kong and the US, which are ironically not UOB’s core markets, experienced declines in collateral valuations. This was a key reason for the pre-emptive GP.
“This portfolio is a relatively small proportion, but we still see continued headwinds in these two markets. However, within the additional allowances were some of these recoveries where we had accelerated the markdowns in collateral,” Leong says.
UOB CEO Wee believes that the sector is in a U-shaped recovery. “It is a U-shape, secured by setting up this pre-emptive provision and it will give us time to recover. From the customer’s standpoint, we want to work with them. It is our primary job to protect the interests of the customers,” Wee says.
Leong adds that the loan-to-value of the Hong Kong commercial real estate portfolio is 44%. “With this buffer, we are bringing our credit cost back to our guidance of 25 bps to 30 bps, not just for 4Q2025, but also for 2026, which will also be within 25 bps to 30 bps.”
He points out that loans grew 5% y-o-y and 3% q-o-q. Of this, trade loans grew by 22% y-o-y. “Our liquidity coverage ratio, net stable funding ratio, Casa (current account and savings account) to deposit ratio, continue to demonstrate our funding and equity positions remain healthy.”
Leong adds that there is potential for writebacks should interest rates fall, and collateral values recover.
Although UOB’s 4QFY2026 is likely to show a normalisation of credit costs, FY2025’s net profit is likely to be lower than 2024’s and absolute dividend is likely to be lower y-o-y.
“The scale of provisions, as well as ‘total credit cost’ guidance of 25-30bps next year suggests this may be the last spike in provisions. To that extent, these results may be the beginning of stabilisation in asset quality concerns. Yet, we expect the Street to evaluate at least one more quarter of performance on underlying trends before moving on from this concern,” JP Morgan says, who has maintained an underweight view on the bank.
For dividends, “given that special provisions are also running high and pre-provisioning operating profit missed estimates, we expect a y-o-y decline in 2025’s dividend per share unless the bank pays a special dividend,” JP Morgan says.
