Will Singapore banks maintain momentum in 2026?

Dividend yields are expected to reach as high as 6%.

Singapore banks are expected to sustain positive momentum in 2026 on the back of high dividend yields, strong capital positions, and continued fund inflows.

Forecast dividend yields for FY2026F remain elevated, with DBS Bank Ltd at 6.1% and both Oversea-Chinese Banking Corporation Ltd (OCBC) and United Overseas Bank Ltd (UOB) at 5.4%, according to a DBS Insights Direct report.

In line with this, potential general provision writebacks and excess capital, excluding UOB, will remain supportive of shareholder returns.

Further sector inflows are anticipated as Singapore’s second batch of EQDP funds, valued at $2.85b, continues deployment into 2026, adding to cumulative inflows that began in 2024.

Major investment banks have also raised their 2025 GDP forecasts after third-quarter growth came in at 2.9% year-on-year (YoY), above the 2% consensus, according to the Ministry of Trade and Industry.

Meanwhile, net interest income is projected to decline in FY26F, but banks have already begun mitigating margin pressure through aggressive deposit repricing. Strong deposit growth will also continue to cushion the impact from narrowing net interest margins.

Wealth management inflows are likely to remain strong as assets continue shifting to Singapore.

Assets Under Management (AUMs) grew 18%, 18%, and 8% YoY at DBS, OCBC, and UOB in the third quarter of the year (Q3). With interest rates trending lower into FY26F, current investment-to-AUM ratios of 40–56% across the three banks are expected to hold.

However, UOB remains an outlier amidst continued concerns over asset quality, despite an outsized $1.9b in provisions booked in Q3.

In its latest results, the bank’s net profit declined 16% YoY to $443m in Q3, reflecting an 8% drop in net interest income amidst margin compression

“With new NPA formation, averaging $556m over the last four quarters, being significantly higher than peers and elevated FY26F credit costs guidance, we are cautious,” the report said. Meanwhile, OCBC is viewed more favourably, with the bank expected to benefit from potential capital management updates.

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