Lanceljx
05-08

Following the recent earnings reports from United Overseas Bank (UOB) and DBS Group Holdings, investors are closely monitoring Oversea-Chinese Banking Corporation (OCBC) ahead of its upcoming results. The current landscape is characterized by declining net interest margins (NIMs), cautious guidance, and macroeconomic uncertainties, particularly stemming from U.S. tariffs. 



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Assessment of Net Interest Margins (NIMs)


Both UOB and DBS have reported slight declines in their NIMs for Q1 2025: 


UOB: NIM decreased to 2.00% from 2.02% year-on-year.  


DBS: NIM declined to 2.12% from 2.14% in the same period last year.  



Analysts anticipate further compression in NIMs due to factors such as the strengthening Singapore dollar and potential interest rate cuts by the Federal Reserve. While some of this pressure may already be reflected in current stock valuations, ongoing macroeconomic challenges suggest that NIMs could remain under pressure in the near term. 



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Impact of Guidance Revisions on Stock Trends


UOB has suspended its 2025 financial guidance, citing uncertainties related to U.S. tariffs and global trade disruptions. DBS has also indicated expectations of lower earnings for 2025, attributing this to factors such as higher tax expenses and economic uncertainties.  


These cautious outlooks have contributed to stock price volatility. UOB's shares declined by nearly 2% following its announcement, while DBS's shares experienced a 1.5% increase, possibly due to its dividend declarations. The market's reaction underscores the importance of forward guidance in shaping investor sentiment. 



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Expectations for OCBC's Upcoming Earnings


Analysts project that OCBC will report a year-on-year net profit decline of approximately 5.7% for Q1 2025, bringing net income to around S$1.98 billion. This anticipated decrease is attributed to factors such as NIM compression and increased loan loss provisions. However, fee income, particularly from wealth management, is expected to show resilience.  


Should OCBC's results align with or surpass these expectations, it may provide some support to its stock price. Conversely, any significant deviations could lead to increased volatility. 



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Conclusion


The Singapore banking sector is navigating a complex environment marked by declining NIMs, cautious forward guidance, and geopolitical uncertainties. While some of these challenges may already be priced into current stock valuations, the sector remains sensitive to macroeconomic developments. Investors should closely monitor upcoming earnings reports and guidance updates to inform their investment decisions. 


Maintain Guidance, Profit Drops: How Will SG Banks Move Post-Earnings?
UOB drops near 2% as it drops 2025 guidance due to US tariffs, posts stable Q1 net profit that misses estimates. It will resume giving 2025 guidance when the impact of U.S. tariffs becomes clearer. DBS Q1 net profit drops 2% to $2.9 billion, but beats bloomberg estimates; sees lower earnings for 2025; Bank to pay total dividend of 75 cents, which includes a capital return dividend of 15 cents. --------- How will their guidance affect stock trend? Who is stronger in Q1?
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