Analysts Remain Bullish on DBS Ahead of Q3 Earnings Amid Market Volatility

Analysts continue to express confidence in DBS Bank ahead of its third-quarter earnings report, even as the broader market for Singapore banks has seen a significant decline, with over US$22 billion in market value lost last week alone. This downturn was triggered by a downgrade of OCBC by Citi, which shifted its rating from 'hold' to 'sell', and reiterated a 'sell' rating on UOB.

As of October 16, DBS shares closed at S$74.11, reflecting a slight increase of 0.5%. In contrast, OCBC remained nearly flat at S$29, while UOB saw a minor decline, closing at S$41.61.

“We assume flat quarter-on-quarter net interest margins for the banks in Q3, slightly below what our interest rate model predicts.”Jayden Vantarakis, head of ASEAN equity research at Macquarie Group

Despite the recent sell-off, analysts are optimistic about DBS's performance. Jayden Vantarakis, head of ASEAN equity research at Macquarie Group, noted that the lending environment remains favourable, with loan growth reported at 16% year-on-year in August, according to the Monetary Authority of Singapore. He anticipates that DBS will meet expectations this quarter, particularly as it is the only bank among the trio to pay dividends in Q3, which he estimated to have an annualised yield of around 4.4%.

CGS International (CGSI) analysts have upgraded their rating on DBS from 'hold' to 'add' and raised their target price to S$79.50. They expect a 2.9% year-on-year growth in non-interest income, driven by a 7.4% increase in wealth management fees due to continued net inflows. However, they also caution that DBS's net interest income (NII) might decline by 2.4% year-on-year and 2.5% quarter-on-quarter, affected by a narrowing net interest margin (NIM) of 10 basis points.

“We believe DBS recorded 2.9% year-on-year growth in non-interest income for Q3, underpinned by 7.4% growth on the year in wealth-management fees.”CGS International analysts Tay Wee Kuang and Tan Jie Hui

Meanwhile, views on UOB are mixed. Vantarakis has an 'outperform' rating on UOB with a target price of S$45.29, highlighting that the stock trades at a 30% price-to-earnings discount. However, Citi's analyst Tan Yong Hong has a 'sell' rating with a target price of S$38, predicting a 9% quarter-on-quarter profit decline.

“We believe Great Eastern’s NBEV, which reflects its business momentum, saw robust Q3 FY2026 growth.”CGS International analysts Tay Wee Kuang and Tan Jie Hui

OCBC, despite suffering a loss of S$8 billion in market value following the downgrade, still has some analysts maintaining a positive outlook. Maybank analysts have a 'buy' call with a target price of S$37.23, citing OCBC's comprehensive wealth management strategy as a potential growth driver. However, CGSI analysts have downgraded their outlook to 'hold', adjusting their target price to S$30.40, noting tighter capital positions compared to peers could pose risks to growth.

As the earnings reports approach, DBS, OCBC, and UOB are all expected to report results that reflect current market challenges and opportunities.