Is It Still a Good Time to Buy Singapore Bank Stocks?

June 24, 2025

Global uncertainty has introduced new challenges to the economic landscape. Here’s how Singapore banks are holding up, and whether it’s a good time to buy their stocks.

Often regarded as core holdings for income-focused portfolios, Singapore’s leading banks—DBS, OCBC, and UOB—are valued for their stability, consistently offering attractive dividend yields of just under 6%.

But with recent global uncertainties and evolving market dynamics, investors are asking: Is it still a good time to buy Singapore bank stocks?

Singapore Banks in the Current Global Climate

Global and Geopolitical Dynamics

Rising protectionism and renewed US tariffs have reignited concerns over global trade. Singapore, despite strong US ties, faces a blanket 10% tariff—less severe than others, but still a potential drag on sentiment and trade flows.

Meanwhile, the Iran-Israel conflict adds to volatility. Iran’s control of the Strait of Hormuz, a key oil route, raises risks of supply chain disruptions and energy price spikes—pressuring global shipping and impacting trade-reliant economies like Singapore.

Impact on the Banking Sector

Singapore’s economy, a small open system deeply embedded in global trade and capital flows, is vulnerable to external volatility. Prolonged trade friction could lead to slower regional growth and suppressed cross-border financing activities.

For banks, the implications are clear: reduced loan growth, a more cautious approach to corporate lending, and increased provisioning needs in trade-sensitive sectors.

Although Singapore’s banks have shown resilience through strong capital buffers and robust management, the unsettled external environment requires continued vigilance.

Singapore’s Economic Outlook and Banking Sector Resilience

Despite these headwinds, Singapore’s banks remain well-capitalised with adequate liquidity and seasoned management teams at the helm. MAS policies continue to underpin macroeconomic stability, and while credit growth may slow, the banks’ diversified models—including regional exposures to ASEAN and Greater China—help to mitigate risk.

A Closer Look at the Big 3 Singapore Banks

Singapore Banks’ Key Valuation Metrics

Name	MCAP (SGD million)	P/E (x)	P/B (x)	EPS growth (%)	Div Yield (%)	ROE (%)
DBS Group	125,668	11.2	1.83	11.9	6.8	17.0
OCBC Bank	72,790	9.7	1.23	7.7	5.3	13.1
UOB Bank	58,894	10.0	1.15	6.6	5.1	12.0
Average		10.3	1.40	8.7	5.7	14.0

Source: Bloomberg, updated on 14 May 2025. Figures are based on trailing 12-months.

While these banks command relatively rich valuations, investors are attracted by the stable dividend payouts and defensive nature of these stocks—attributes highly prized during uncertain market cycles.

The banks’ attractive yields and high dividend reliability largely stem from their status as well-managed, overcapitalised institutions. The rich pricing of these stocks isn’t necessarily a drawback, but a reflection of the market’s trust in their consistent dividend delivery and risk management.

Factors that Drive Dividend Upside

Despite a market narrative that paints Singapore banks as “high yield, low growth”, three key catalysts suggest a potential for upside surprises in dividends.

1. Capital Return Through Special Dividends and Share Buybacks

Singapore banks have built up strong capital buffers. This allows them to actively reward shareholders through special dividends and share buybacks. Recently, OCBC and UOB announced plans worth S$2.5 billion and S$3 billion respectively, signalling a more active approach to rewarding investors.

Share buybacks reduce the number of shares in the market, which can help boost earnings per share (EPS) and support higher future dividends. Even modest buybacks of 1–2% a year can make a difference over time. This points to a positive trend: steady dividends today, with room for growth in the years ahead.

2. Wealth Management as a Structural Growth Lever

Singapore’s position as Asia’s private banking hub is strengthening. DBS and UOB saw double-digit AUM growth in 2024, with fee income offering stability amid headwinds. This supports steady payouts (50–60%) and reinforces dividends, even in volatile environments.

Even as geopolitical tensions continue to stir uncertainties, Singapore’s safe-haven status ensures steady capital inflows, predictable earnings, and consistent payouts, making wealth management a quiet yet critical growth engine.

3. M&A and Regional Expansion: The Big If

Singapore banks, with strong capital buffers and a firm SGD, are well-positioned to explore regional M&A opportunities. The prospect of ASEAN banking consolidation is especially compelling, given weaker asset prices and slower growth in the region.

Thoughtful, well-timed deals could improve profitability, strengthen regional presence, and create new income sources. For investors, this adds a layer of long-term growth potential—beyond just dividends—showing that Singapore banks aren’t just stable income plays, but also capable of quietly compounding value over time.

How Bank Stocks Fit Into Your Portfolio

For dividend-focused investors, Singapore banks represent a dual opportunity: providing reliable income while offering latent growth potential. Their role in a diversified portfolio is twofold:

Income Generation and Capital Preservation: Consistent dividend payouts and defensive characteristics make these stocks an attractive anchor in turbulent times.
Room for Future Growth: The structural drivers—from share buybacks to strategic M&A—add an element of upside that might not be immediately evident from traditional valuation metrics such as P/E ratio and dividend yield.

Investors should weigh these advantages against risks like subdued loan growth and heightened external uncertainties, ensuring their portfolio aligns with their risk tolerance and investment horizon.

Syfe’s SG Banks Bundle allows you to capitalise on these short- and long-term returns. It offers strategic exposure to the top three banks in Singapore, and is ideal for investors seeking steady growth, consistent income, and financial sector resilience in a growing ASEAN economy.

For a more hands-on approach, Syfe Brokerage offers access to both Singapore and US markets.

Syfe Brokerage is an easy and low-cost option for Singapore stock investing. Pricing for SGX stocks is just 0.06% of traded value (minimum S$1.98), and there are no platform and withdrawal fees.

Disclaimer: This article is for informational purposes only and should not be viewed as financial advice. It is not meant to market any specific investment, or offer or recommend the purchase or sale of any specific security. All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone. This advertisement has not been reviewed by the Monetary Authority of Singapore.

Final Word for the Dividend-Focused Investor

The market narrative surrounding Singapore banks might appear subdued—earning high yield but delivering low growth. Yet, this overlooks the potent combination of shareholder rewards, growing wealth management segments, and potential regional expansion opportunities.

Even if the direct impact of tariffs or global headwinds seems limited, the cumulative effect of strategic moves could mean a more buoyant dividend trajectory in the coming years. Plus, with the shrinking difference between the returns from bonds and the returns from stocks, stable, income-generating stocks like Singapore banks look more attractive.

In conclusion, while uncertainties in global trade and economic outlook persist, Singapore banks continue to stand out for dividend investors—not just as yield anchors, but as stealth compounders ready to capitalise on a structurally favorable environment.