Singapore Bank Stocks Extend Losses After JPMorgan Flags Pressure From Soaring Long Bond Yields on Q3 Profits
Singapore bank shares deepened their decline on Friday as JPMorgan Chase & Co. cautioned that sharply rising long bond yields will weigh on third-quarter earnings for lenders in Southeast Asia. $UOB(U11.SI)$ fell 1.91%; $DBS(D05.SI)$ fell 1.27%; $OCBC Bank(O39.SI)$ fell 0.45%.
On Thursday, DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp. each fell more than 4%, while United Overseas Bank Ltd. dropped 5.2%. These stocks were among the heaviest drags on the benchmark Straits Times Index, which plunged 3.5%, its biggest drop since April 2025. The index was the weakest performer in Asia.
The slide follows a multiyear rally in Singapore lenders fueled by record profits and the city-state's expanding role as a global wealth hub. That supportive backdrop is now being tested by worries over how high bond yields could affect dividend payouts, with valuations already elevated.
“What matters is not just where rates are going, but whether asset yields can keep pace with rising funding costs to defend net interest margins,” said James Ooi, market strategist at Tiger Brokers in Singapore. While higher rates can lift yields on loans, banks’ profitability also depends on the levels lenders pay for deposits and other forms of funding, he said.
On Wednesday, a JPMorgan analyst said surging long bond yields will lead to larger mark-to-market losses on trading books and weigh on capital market activity for Southeast Asian banks. In Singapore, slower balance-sheet growth, intensifying deposit competition and a possible normalization in wealth-management fees could trigger earnings downgrades, with OCBC more at risk.
"The surprise getting into third quarter 2026 is likely skewed negative for quite a few banks under our coverage," JPMorgan analyst Harsh Wardhan Modi wrote in a note, recommending clients trim their allocations.
The rally earlier this year also left Singapore banks looking DBS Becomes Pricier Than JPMorgan, Goldman: Equity Insight relative to some Wall Street rivals, including Morgan Stanley and Goldman Sachs. DBS, the country's largest lender, trades at 2.9 times one-year forward book value, nearly double its historical average.
HSBC Holdings Plc downgraded Singapore stocks to neutral from overweight as valuations have become demanding and tighter financial conditions weigh on the real estate sector.
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