JPMorgan sees DBS at S$70 in a year’s time; with potential S$3.30 dividend for years

[SINGAPORE] As Singapore’s financial sector evolves, DBS could get “unjustifiably expensive”, and UOB may face volatility over the next six months, said JPMorgan in a note on Friday (Nov 28).

This comes as local banks and the Singapore Exchange (SGX) are set for “significant improvement in value creation” over a multi-year period, amid shifts to the financial sector that are currently “under-appreciated”, the investment bank said.

It assigned DBS a December 2026 price target of S$70, and upgraded its rating on the SGX to “overweight”; OCBC was also “overweight”, and UOB, “neutral”.

JPMorgan analysts Harsh Wardhan Modi and Daniel Andrew Tan noted that DBS has restructured towards a lower loan intensity; its 2027 loans-to-assets ratio is estimated to stand at 48 per cent, from 63 per cent in 2017.

Modi and Tan said: “Higher rates, coupled with deposit franchise, should allow (DBS) to sustain net interest income (NII) growth over the next five years, on top of a 2 per cent NII compound annual growth rate in 2024 to 2027.”

Noting that DBS’ 2026 earnings per share (EPS) is expected to “mark a low” for the next five years, the analysts said that its regular distribution per share (DPS) of S$2.88 and part of its special dividend may remain intact.

“The bank can potentially pay S$3.30 DPS for years to come, on our estimates,” they said.

Speaking on DBS’ cash DPS commitment, it noted that the lender has committed to paying S$0.66 a quarter in regular cash by Q4 2025, and S$0.72 by Q4 2026. This amounts to 82 per cent of the estimated EPS for 2027 and is a “significant commitment that only best-in-class banks can make and deliver”, Modi and Tan said.

JPMorgan noted that UOB has lagged peers in wealth management, with limited organic and inorganic build in the last 15 years, as well as in US dollar-denominated payments and deposits.

“These factors, among others, likely led the bank to take too much risk in areas linked to property in Asia and the US in the last decade, in a bid to generate better returns. Accordingly, we are now witnessing an increase in credit risks,” JPMorgan said.

While Modi and Tan expect UOB’s stock to face volatility “in a wide range” over the next six months, they have upgraded it to a “neutral” rating from an “underweight” rating, given that “it is tough to expect the stock to actively underperform”.

JPMorgan noted that the SGX is a “direct beneficiary” of efforts to revitalise the equity market and increase wealth allocation to Singapore assets.

Noting that the stock has gained 30 per cent in the year to date, they foresee 6 to 7 per cent of further upside to street EPS and upgraded it to “overweight”, with a S$18.15 price target for December 2026.