The banking industry is poised for a period of financial stability in the final quarter of 2025, supported by resilient investment fees and more consistent profit margins. According to a recent sector report by UOBKH analyst Jonathan Koh, the quarter is defined by a slowing decline in net interest margins (NIM), robust wealth management activity, and healthy asset quality.
DBS Group Holdings: Performance Estimates
UOBKH projects that DBS will post a net profit of $2.523 billion, remaining relatively unchanged compared to the previous year. While loan growth is estimated at 2.5% YoY, expansion in residential mortgages and corporate lending remains subdued. Key data points include a NIM compression expected to drop by 5 basis points quarter-on-quarter to 1.91%. Furthermore, wealth management revenue is forecast to jump 44% YoY to $750 million, despite a slight seasonal dip from the third quarter. Total fee income is expected to rise by 31% YoY, as strong credit card performance helps mitigate seasonally weaker transaction and loan-related activities.
OCBC: Growth and Strategic Gains
For OCBC, both UOBKH and CGS International (CGSI) anticipate a net profit of approximately $1.747 billion, marking a 4% year-on-year increase. Analysts predict a modest 3.8% annual growth in loans. Notably, the bank has successfully reallocated surplus deposits into productive loans, bringing its loan-to-deposit ratio back to 80%. While NIM is expected to soften to 1.8%, this is likely to be balanced by a 28.5% surge in non-interest income. Strategic hiring of relationship managers is also driving results, with wealth management contributions expected to rise 40% YoY to $345 million due to expanded Assets Under Management (AUM).
Future Drivers and Risk Factors
The sector’s trajectory is supported by steady GDP growth, which maintains demand for credit and fee-based services. Low credit costs and stable asset quality further bolster this positive outlook. However, analysts maintain a cautious stance, citing geopolitical instability as a significant risk that could disrupt the sector’s current momentum.
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