Skip to content

We want to clarify that IG International does not have an official Line account at this time. We have not established any official presence on Line messaging platform. Therefore, any accounts claiming to represent IG International on Line are unauthorized and should be considered as fake.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

DBS, OCBC, UOB: Where are their stocks headed?

Singapore’s three dominant lenders have seen a slew of developments of late, including the central bank awarding digital-bank licences to four new players on Friday (04 December).

DBS, OCBC, UOB: Where are their stocks headed? Source: Bloomberg
  • Research teams are still largely upbeat on DBS, although close to half are now neutral
  • OCBC may offer more share price upside than UOB on cheaper valuation
  • UOB could return to double-digit ROEs by the end of 2023

DBS

Out of 20 analysts, 10 recommended ‘buy’ on DBS Group Holdings Ltd while eight rated it ‘hold’. Their average 12-month target price on the counter is S$25.47.

CIMB believes DBS will lead the Singapore banking sector’s recovery to a double-digit return-on-equity (ROE). Southeast Asia’s biggest bank by assets may see its ROE improve to 10.1% by 2021 from 9% in 2020, thanks to its ‘finesse in maneuvering the markets’, wrote the brokerage, which has an ‘add’ call and S$28.35 target on DBS shares.

In India, DBS will be bailing out the ailing Lakshmi Vilas Bank (LVB). Fitch Ratings said the LVB branches will give DBS a ready network at an affordable price. However, Jefferies is of the view that scaling up might weigh on DBS’s profitability and efficiency.

And considering the limited threat from the upcoming Singapore digital banks, Jefferies kept its ‘hold’ call on Monday.

Maybank recently downgraded DBS by two notches to ‘sell’, with a S$24.63 target price, predicting that the run-up in DBS’s stock would be unsustainable.

OCBC

CIMB, which rated OCBC ‘add’ with a S$12.52 target, expects the bank to return to double-digit ROEs by 2023.

Credit rating agency Moody’s foresees a ‘mild increase’ in OCBC’s problem loans ratio in 2021, rising from 1.6% as of 30 September 2020, as well as further challenges to asset quality and profitability. That being said, Moody’s believes the bank’s credit profile will remain ‘very strong’.

Meanwhile, Maybank, in downgrading OCBC to ‘sell’, commented that the stock was ‘uncompelling as a dividend play’.

DBS Group Research analyst Lim Rui Wen in late November maintained ‘buy’ on OCBC with a S$11 target, as current valuations were inexpensive and the market appeared to have priced in some economic headwinds.

‘We prefer OCBC to UOB as we believe OCBC provides better share price upside at current levels on cheaper valuation’, she wrote.

Analysts’ average target price on OCBC stood at S$10.80, and 12 out of 21 analysts recommended ‘buy’.

UOB

DBS’ Lim noted that UOB's loans as of September 2020 have expanded by 4% since December 2019. ‘We look forward to modest credit demand going forward, with recovering economic activities,’ she added.

Bright spots include growth in sustainability-related and renewable-energy loans, said Lim. ‘Further, UOB is seeking pockets of growth opportunities in intra-ASEAN and outside of ASEAN cross-border flows, as well as opportunities in trade and working capital loans,’ the analyst pointed out. She had a 12-month target price of S$24.80 and a ‘buy’ rating on UOB.

Also, the bank will likely return to double-digit ROEs by 2023, according to CIMB, which issued ‘add’ with a S$27.72 target.

On the other hand, Maybank recently downgraded UOB by a notch to ‘sell’, pointing to its rising share price amid encouraging news of Covid-19 vaccines. ‘We believe this is overdone and amplified by liquidity,’ the brokerage added.

Of the 20 analysts covering UOB, 12 said the lender was a ‘buy’ while six recommended ‘hold’. On average, the target price is S$24.06.

Want to take a position in Singaporean listed stocks – long or short?

Create an IG trading account or log in to your existing account to get started now.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.