OCBC, DBS and UOB shares fall for second day as investors reassess bank earnings

OCBC, DBS and UOB shares fell for a second consecutive day in Singapore on Thursday, October 8, after a Citi downgrade of OCBC sharpened scrutiny of the banks’ earnings outlook. The decline matters to investors because all three lenders had reached record share prices earlier this year, while analysts disagree about how rising rates will affect their profits.

Channel NewsAsia reported OCBC down 4.29% at S$29 on Thursday, UOB down 5.16% at S$40.25 and DBS down 4.7% at S$73.85. Those were its reported October 8 prices, not identified as closing prices. At the midday break, The Straits Times had recorded smaller declines for DBS and UOB, illustrating why the two sets of figures should be read as observations at different times.

How the two-day decline developed

The sell-off began on Wednesday, when OCBC closed 5.9% lower at S$30.30, according to The Business Times. DBS closed down 1.4% at S$77.49 and UOB fell 2.9% to S$42.44. The paper calculated that OCBC lost more than S$8 billion in market value that day. Thursday’s further falls spread the focus beyond OCBC to all three major local lenders.

The retreat followed an unusually strong run. Channel NewsAsia reported that all three banks had set fresh share-price records in 2026, and said OCBC had gained about 60% during the year before the pullback. Those gains left investors weighing whether the earnings that supported higher valuations could continue. Analysts interviewed by CNA cited profit-taking, elevated valuations, higher bond yields and possible increases in bank funding costs as explanations for the selling. Their assessments do not establish a single proven cause.

Why Citi downgraded OCBC

According to The Business Times, Citi expected OCBC’s third-quarter net interest margin to contract as Singapore-dollar fixed-deposit rates rose by 35 to 70 basis points. The broker also questioned optimistic expectations for local interest rates and whether exceptionally strong first-half wealth-related income could be sustained. Those are Citi’s forecasts and judgments, reported by the paper; the third-quarter results had yet to establish the outcome.

The pressure from rates is less straightforward than a simple gain from charging more on loans. Tiger Brokers strategist James Ooi told The Straits Times that higher Singapore-dollar rates might fail to help banks if what they pay for funding rises as quickly as returns on their assets. Net interest margin measures the difference between income from loans and investments and the cost of deposits and borrowing. Investors will need the lenders’ results to see how that balance actually moved.

Analysts disagree on the banks’ prospects

RHB took a more positive view than Citi. The Business Times reported that RHB kept an overweight rating on Singapore banks, named OCBC its top pick and set a S$33.70 target price. It projected sector net-profit growth of 10% in both the 2026 and 2027 financial years, arguing that higher benchmark rates could support operating income. RHB expected OCBC and UOB to benefit more than DBS, while Citi retained a buy rating on DBS and a sell rating on UOB.

The differences show how much depends on the timing and mix of income and costs. RHB raised its profit forecasts for OCBC and UOB for the 2027 and 2028 financial years, The Business Times reported. By contrast, Citi expected higher deposit rates to squeeze OCBC’s near-term margin. Saxo strategist Charu Chanana told The Straits Times that profit-taking, earnings concerns and global bond-market volatility appeared to be contributing to the continued weakness, and that further near-term volatility was possible.

What investors will learn from the next results

The banks’ next earnings reports, expected in November, should provide a clearer test of the competing forecasts. Analysts quoted by The Straits Times said they would watch whether third-quarter net interest margins remained resilient and whether recurring fee income offset any return toward more usual levels of wealth-related revenue. Until those figures are available, the share-price falls show investors reassessing expectations, rather than proving that the lenders’ earnings have weakened.