JP Morgan says: “Numerically, UOB beat our 1QFY2026 estimates by 5%. Our full-year estimates are 6% below Bloomberg consensus, which suggests, at best, an in-line set of results. Yet, given the high bar set by DBS in 1QFY2026, we believe these numbers may not be a driver for the stock in either direction.”
JP Morgan remains bullish on DBS, which announced its 1QFY2026 net profit of $2.93 million, up 30% q-o-q and 1% y-o-y, on April 30. It was 2% above JP Morgan’s own 1Q estimate and about a 2% beat compared to Bloomberg’s consensus.
JP Morgan says: “[UOB’s] treasury income was quite firm, up $150 million q-o-q to $364 million (19% of pre-provisioning operating profit or PPoP), which in our view deserves lower multiples vs most other business lines. Fee growth was weak at 2% q-o-q despite seasonality, and down 8% y-o-y. This is an important contrast to DBS, which was up 35% and 16% q-o-q and y-o-y, respectively. We expect these trends to hold well at OCBC too. We worry that the weaker wealth management franchise at UOB could continue to be a drag on fees for a few quarters.”
A lower cost-to-income ratio of 44.5%, down 1.9 percentage points y-o-y, was the main driver of the UOB’s PPoP beat, JP Morgan observes.
See also: Citi drops after unveiling ‘underwhelming’ new return target
Non-performing loans (NPL) were slightly better at 1.5% with credit costs at 24 bps, which was “a beat versus our forecasts”, the JP Morgan report indicates. UOB’s US portfolio quality improved in line with the 4Q2025 guidance, with NPL halving q-o-q to 1.5% with coverage at 233%.
Group CEO Wee Ee Cheong announced a modest franchise shift: “Our immediate focus is to grow assets under management (AUM) and improve invested AUM penetration. Our ambition is to double wealth income by 2030 through discipline, organic execution, people and solutions.” UOB's FY2025 wealth income was $1.281 billion
Wee also emphasised UOB’s Asean footprint as a source of growth. “Over the past three years, our focus has been on integrating the Citi portfolio and bringing everything into a single, unified platform. That work is largely completed and positions us as one of the most connected banking franchises in Asean. We are moving into the next phase now, unlocking the value of our enlarged customer base to reshape the group towards a more diversified, fee-driven mix anchored on connectivity, trade and cash (management), lifestyle solutions like credit cards and wealth. We see significant opportunities, including in wealth, underpinned by a large and increasingly affluent customer base that is under-penetrated. This gives us a long runway for sustainable, organic growth,” Wee elaborates.
See also: UOB gunning to double wealth income by 2030
On April 30, during a media briefing, DBS’s group CEO Tan Su Shan acknowledged that the environment in India and Indonesia is challenging: “We have been stress testing for rupee and rupiah volatility, which is why we have been fairly conservative in India and Indonesia. We reduced our unsecured consumer and SME exposures in these two markets, and to a smaller extent in China.”
Wee says Indonesia is 3% of UOB’s total exposure. “We are still growing our consumer [banking], mortgages and SMEs. We have to stand by our customers. This is not the time to de-risk,” he says, repeating UOB’s tagline “Right by you”.
UOB’s Group CFO Leong Yung Chee says that in Indonesia, UOB’s retail focus is on its affluent customer base. “Likewise, for wholesale banking, our focus is guided by our sector solutions group. We’ve identified seven specific industries: TMT [technology, media and telecommunications], consumer goods, industrial, construction and infrastructure, real estate, hospitality, energy and chemicals, and healthcare. In Singapore, because it’s our home market, we are more broad-based. Outside of Singapore, it’s more targeted, because there’s information asymmetry,” he elaborates.
JP Morgan’s report says the DBS franchise “is on track to gain market share across profit pools. We expect re-rating for DBS to continue. With every passing quarter, our characterisation of DBS as the ‘JPM of Asia’ appears truer”.
The valuation disconnect between DBS and UOB is stark. DBS’s P/B ratio of 2.42 times as at May 7 and its dividend yield of 5.3% are at a premium to UOB’s P/B of 1.22 times and dividend yield of 4.3%. Perhaps investors should hedge their bets across all three local banks and JP Morgan, which last traded at a P/B of 2.45 times.
