Analysts love a bullish call.

So when a Citi analyst put a sell call on OCBC two weeks ago, I went: “Finally someone started making sense.”

Singapore banks haven’t fallen as much as I’d like. That tells me one thing: The market is treating DBS, OCBC and UOB like a riskless asset class. Even if people don’t say the word “riskless”, the market is buying Singapore banks as though it believes it’s riskless. There’s little margin of error for Singapore banks trading at market highs.

Investors have stopped asking what could go wrong. And right now, it feels like fear of missing out is doing more of the buying than careful analysis.

You see, Singapore bank shares did not always tickle the market’s fancy. History has shown me there are periods when Singapore bank shares were discarded like empty milk bottles.

How I value DBS, OCBC and UOB

​One of my favourite valuation metrics is the price-book value ratio, or P/B ratio. The ratio is a great way to assess a company’s value that relies on a large asset base to produce profits. Banks are exactly that. DBS, OCBC and UOB are traditional commercial banks. They take in depositors’ money, lend out loans to corporate borrowers and individuals and earn a spread, which is the bank’s profit margin.

Even though our local banks have started to grow their wealth management a lot, a bulk of DBS, OCBC and UOB profits still come from their loans business.

Over the long run, investors pay a higher P/B ratio if a bank can efficiently use its assets to generate higher profits. How do I measure that? I use a bank’s return on equity (ROE). The ROE measures the capital efficiency of a bank. It tells me how much profits a bank generates from each dollar reinvested into the business. The higher the ROE, the more capital efficient the bank is, the higher the P/B ratio.

In 2006, DBS was earning a 12% ROE. For every S$100 the bank was investing its shareholders’ capital back into the business, it made S$12 of profits. In my view, this is very good. Because of this, investors were paying a hefty 2.8x P/B ratio back then.

During the same period, OCBC was earning 15% ROE and UOB was earning 16% ROE. All three banks were earning peak ROE.

However, what many didn’t realize was how both the bank’s valuation and ROE started falling as market cycles changed. Interest rates went up, profits were under pressure.

It wasn't just DBS. Both OCBC’s and UOB’s ROE started falling.

Singapore banks are cyclical. In the mid 2000, investors paid a high P/B ratio for Singapore banks. However, as the banks’ profits fell due to market cycle changes, investors quickly stopped paying a premium.

Of course, it just didn’t happen once.

In 2015 and 2016, the same thing happened with the three Singapore banks - shares fell 28-35% because of the oil & gas crisis.

A hint of weakness can shake the belief Singapore banks are riskless - and prices adjust quickly.

Would I buy Singapore banks today?

Today all three Singapore banks have hit near-peak ROE again.

That came from high interest rates of the past few years, healthy loan growth, and a boom in wealth management helped by capital flowing in from North Asia. But wealth management assets and loans aren’t all that riskless. Wealth assets come and go.

Competition to attract new wealth assets will come in. UBS says it will increase its client advisers by nearly 10% across Asia, with half based in Singapore. This is to expand the European bank’s wealth management business. Last month, Hong Kong was back in the spotlight as the world’s top cross-border wealth hub, overtaking Switzerland. In fact, the island city’s IPO grew 76% y/y in the first eight months of 2026. An IPO boom creates new wealth, and that tends to stay with Hong Kong’s private banks.

When you buy a stock, you either get something good or get something bad. So you got to buy when things are cheap because over time, if you buy cyclical shares at the top, it’s going to go down.

Instead, I believe the best time to buy bank shares is when they are severely affected by macro surprises.​

- Willie Keng, CFA

Founder, DividendTitan.com