5 takeaways from Singapore banks’ Q2 results – diverging outlooks, China tax rules emerge as new watchpoint

1. Singapore's major banks DBS, OCBC, and UOB reported strong Q2 earnings growth, driven by robust wealth management income and fee income. DBS's net profit increased by 9%, while OCBC saw a 22% rise and UOB climbed 10% year-on-year. Wealth management remained the key growth engine for all three banks.

2. DBS's wealth management income grew by 16% in the first half to S$3.3 billion, setting a new record as assets under management surpassed S$500 billion. The business contributed to a record S$2.94 billion in fee income, prompting CEO Tan Su Shan to describe the team as "firing on all cylinders". OCBC also saw significant growth in its wealth franchise, with income rising 27% to S$3.29 billion, and UOB's wealth management income increased by 16% to S$717 million.

3. The banks' guidance revisions indicated differing expectations for the remainder of 2026. DBS raised its forecast for commercial-book non-interest income growth to the mid-teens, driven by wealth management, and now anticipates total income for the year to exceed 2025 levels. OCBC upgraded its full-year loan growth forecast to the high single-digit to low double-digit range, while UOB remains optimistic about flat earnings compared to 2025.

4. A new issue emerging for the banks is China's increased scrutiny of offshore wealth, which includes rules surrounding offshore trusts and taxation of overseas investment income. This could potentially impact the banks' clients with significant Greater China wealth businesses. However, the banks stated that they have not seen any significant impact yet, with OCBC and DBS indicating that their offshore trust businesses are relatively small and not facing significant asset outflows. UOB also expressed cautious optimism about the potential implications.

5. The three banks are extensively deploying AI, but the financial contribution remains difficult to quantify. DBS has been most vocal about AI's potential revenue-generating capabilities, using the technology for idea generation and customer prompting. OCBC maintains a more cautious approach, integrating AI into its broader "ADD" strategy of digitisation, data analytics, and AI.

UOB is also leveraging AI, with 30,000 employees accessing Microsoft Copilot and over 300 AI use cases rolled out, but has yet to put a dollar figure on the benefits. The banks are actively working to establish frameworks for measuring AI's impact, with UOB planning to report these numbers regularly by the end of the year.