DBS crosses $200 billion in market capitalisation

Shares of Singapore’s three local banks have surged to record levels over the past week, helping lift the Straits Times Index (STI) to a fresh high and pushing DBS above $200 billion in market capitalisation on July 13 – making it the first Singapore-listed company to cross that threshold.

Analysts told The Business Times that the rally could have more room to run, buoyed by increasing investor optimism ahead of the lenders’ second-quarter results due in early August.

A clearer earnings outlook as well as improvements in the interest rate environment likely drove the share price rally over the past week, with potential for further increases if the banks provide positive guidance when they post their results, they added.

“We are entering an environment where we believe Singdollar rates will be supportive of improving net interest income alongside continued strength in non-interest income,” said Jayden Vantarakis, head of Asean equity research at Macquarie Capital.

At the close on July 13, DBS was up 0.5 per cent at $70.79, OCBC had risen 0.2 per cent to $27.48, and UOB was down 0.9 per cent at $43.98.

The rally in the three banks – which together account for more than 50 per cent of the STI’s total weight – has also pushed the benchmark index to new highs. The STI was nearly flat on July 13, but still inched up 0.02 per cent to a fresh record of 5,470.34 points.
Vantarakis noted that US dollar strength as a result of higher American interest rates is positive for Singapore dollar rates, and this environment of modest rate increases will support wealth flows and asset quality.

He also sees potential for further rerating in the sector, supported by growth in both net interest income and non-interest income, while the Singdollar remains a preferred currency amid broad strength in the greenback.

Furthermore, the banks stand to benefit from strong credit growth and wealth management fees, said Thilan Wickramasinghe, head of Singapore research and regional head of financials at Maybank Securities.

Over the past week, continued market uncertainty surrounding some regional markets as well as conflict in the Middle East are likely driving safe-haven liquidity towards the Singapore banks, he added.

He said these have resulted in a clearer earnings outlook for the banks, creating more opportunities for the banks to return capital to shareholders.

But the magnitude of any benefit from higher rates may be capped, said Morningstar equity analyst Kathy Chan.

Singapore counters – especially the three banks – have already experienced safe-haven capital inflows throughout 2025, resulting in low domestic funding costs, she noted.

If this persists, there would be less upside to the Singapore Overnight Rate Average, which would limit the pass-through to the banks’ margins, she said.

Any rise in net interest income may also be hit by softer loan growth, should macro uncertainties continue to weigh on credit demand, she added.

Nevertheless, Chan said non-interest income, particularly from the wealth management business, will remain a key driver for Singapore banks’ earnings in 2026.

Glenn Thum, research manager at Phillip Securities Research, also noted that loan growth in Singapore remains healthy, based on data from the Monetary Authority of Singapore.

Overall, analysts expect the banks’ results and guidance to be the main driver for their share price movements.

The banks will report their Q2 results in August, beginning with DBS on Aug 6, followed by OCBC and UOB on Aug 7.

In a July 7 report, Vantarakis upgraded his call on DBS and UOB to “outperform” from “neutral”. He also raised his target prices for all three banks – that of DBS to $70.86 from $52.38; OCBC to $27.76 from $24.25; and UOB to $45.16 from $36.78.

Citi analyst Tan Yong Hong also increased his target prices for the lenders. He lifted DBS’ target to $73.50 from $65; OCBC’s to $28.40 from $24.50; and UOB’s to $41.50 from $37.40.

He has a “buy” call on DBS and OCBC, and a “neutral” call on UOB.



-The Business Times