Resilient banking earnings, better IPO conditions could bolster STI in 2025

But shocks from a tariff war arising from US policies cannot be discounted: Analysts

- Sheila Chiang

Bumper results from the three local banks and improved listing conditions could bolster the Straits Times Index (STI) in 2025, but there is a risk US President Donald Trump could throw a spanner in the works, analysts told The Straits Times.

Much is riding on the banks, which are widely expected to post record full-year earnings.

DBS Bank has already done its part, reporting on Feb 10 that full-year net profit rose to a high of $11.4 billion in 2024. UOB reports on Feb 19 and OCBC Bank on Feb 26.

The STI hit a new high of 3,921.3 points on Feb 10 – finally breaking the record of 3,906.16 points set way back in October 2007.

It was no coincidence that DBS, OCBC and UOB shares set new records on the same day, given the lenders have a combined weight-age of about 54 per cent in the STI. For the first time, DBS shares crossed $46 while UOB shares surpassed $38.

OCBC shares traded as high as $17.65.

"The banks continue to have very attractive dividend yields and DBS upgraded its dividend outlook on Feb 10, so that should remain a supporting factor," said Mr Jayden Vantarakis, head of Asean equity research at Macquarie Group.

All three banks have committed to capital management returns, with OCBC ahead at a dividend yield of 4.94 per cent, followed by DBS at 4.71 per cent and UOB at 4.55 per cent, according to SGX data as at Feb 17.

Mr Adrian Loh, head of research at UOB Kay Hian, said the banks' net interest margins remain healthy and their wealth management platforms are performing strongly.

"Importantly, they are all in the midst of returning cash to shareholders so their respective share prices should be well-supported," added Mr Loh.