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).

  • 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


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.


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’.


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.

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