Why UOB has the most to gain from stronger Singdollar rates: Macquarie
The bank is set to enjoy the biggest boost from improving Singdollar interest rates
Macquarie Equity Research believes United Overseas Bank (UOB) stands to gain the most from rising Singapore dollar interest rates. As of Sep 30, the three-month compounded SGD overnight rate averaged 1.4%, compared to 1% at the beginning of the year. This is projected to increase to about 1.44% in the first quarter of 2027, owing to a strengthening US dollar driven by a hawkish Federal Reserve.
UOB is particularly leveraged to this trend, with 43% of its loans in SGD and 66% of its revenue from net interest income, according to Macquarie's Jayden Vantarakis. In contrast, DBS and OCBC have 37% and 58% of their loans in SGD, respectively, with loan-to-deposit ratios of 71.6% - the highest in over three years. UOB's price-to-earnings multiple is also 28% lower than DBS and OCBC, and its price-to-book multiple is 49% lower.
Macquarie, which maintains an "outperform" rating on all three banks, prefers UOB over DBS and OCBC. While DBS benefits from high return on equity, strong capital management, and a rising rate environment, OCBC gains from strong momentum in its wealth franchises.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
