DBS, UOB and OCBC shares extend fall amid Fed, tariffs uncertainty

Shares of all three local banks extended their decline on April 8 as potential US Federal Reserve rate cuts and the Trump administration's sweeping tariffs weigh on the banks' outlook.

- Sheila Chiang

Analysts told The Straits Times that these uncertainties continue to put pressure on and could soften loan demand, net interest margins and wealth management activity.

OCBC Bank led the losses, dropping 4.3 per cent to close at $14.81, below $15 for the first time since October 2024. UOB slid 3.3 per cent to $32.13 and DBS Bank also fell 3.3 per cent to $38.

The Straits Times Index (STI) - of which the local banking trio form a heavy weighting - was down 2 per cent to 3,469.47 points, after crossing the 4,000-point mark for the first time on March 28.

This comes after share prices of all three banks fell sharply on April 7, with DBS dropping nearly 10 per cent to $39.28. OCBC Bank sliding 6.9 per cent to $15.47 and UOB declining 6.3 per cent to $33.23.

Other indexes in Asia have rebounded, with the Nikkei 225 surging 6 per cent, the Hang Seng Index up 1.5 per cent and the Kospi Index trading 0.3 per cent higher.

Mr Michael Makdad, senior equity analyst at Morningstar, said potential US Fed rate cuts could reduce the banks' net interest margins, putting pressure on their net interest income.

IG market strategist Yeap Jun Rong noted that investors are now pricing in four 25-basis-point rate cuts through 2025, a notably more dovish stance compared with just a month ago.