**Singapore Banks Capitalize on Share Price Weakness for Buybacks**
Singapore’s banks are seizing the opportunity presented by recent declines in their share prices to engage in stock buybacks, contributing significantly to what is projected to be the largest corporate repurchase activity in the city-state in four years. From April 1 to April 23, DBS Group Holdings Ltd., Singapore’s largest bank, accounted for nearly half of all stock repurchases, followed by United Overseas Bank Ltd. at 25% and Oversea-Chinese Banking Corp. at just over 8%, according to Bloomberg data.
In recent months, Singapore’s well-capitalized banks have committed to returning billions in surplus capital to investors, buoyed by record-high earnings. This strategy has proven beneficial during global stock selloffs, particularly those triggered by U.S. tariff policies. In Europe, banks have also emerged as major players in buybacks, while China has seen its highest share repurchase announcements since a stock market downturn in February 2024.
Analyst Thilan Wickramasinghe from Maybank noted that Singapore’s lenders have been holding excess capital for some time, despite recent investments and integrations. However, he cautioned that the current economic uncertainty could lead to a reassessment of capital returns. Earlier this month, shares of DBS, UOB, and OCBC fell to multi-month lows amid a broader decline in global equities, although they have since recovered some losses. Investors remain wary that sluggish economic growth may prompt interest rate cuts, potentially affecting banks’ lending margins.
Despite these concerns, Bloomberg Intelligence suggests that Singapore banks are less exposed to U.S. tariffs compared to their Southeast Asian counterparts, as supply chain adjustments are likely to enhance cross-border business opportunities. Quarterly results from these banks are expected in May.
Morgan Stanley’s Southeast Asian analysts, led by Nick Lord, have revised their earnings estimates for Singapore’s banks downward by up to 11% for 2025 and 8%-11% for 2026, citing a “pre-emptive provision charge based on deteriorating macroeconomic variables.” Nevertheless, the bank has maintained its capital return forecasts, anticipating that the banks’ common equity Tier 1 ratios will remain robust due to lower loan growth and strong return on equity.
Goldman Sachs has retained a buy rating on the three banks, highlighting their strong and sustainable profitability and ability to increase capital returns. The firm expects excess capital for these banks to accumulate by 2027, given their capacity for capital generation.
Jefferies analyst Sam Wong pointed out that since all three banks are trading above their book value, buybacks may not be the most effective method for shareholder returns. However, he acknowledged that a buyback program could provide stability in the current market environment.
**FAQ**
**Q: Why are Singapore banks engaging in stock buybacks?**
A: Singapore banks are capitalizing on recent declines in their share prices to conduct stock buybacks, which are expected to be the largest in four years, as a way to return surplus capital to investors amid strong earnings.