UOB jumps 2.2% to 9-month high as market rises; Macquarie upgrades stock

It has potential for a ‘relative-value catch up play’, with headwinds set to abate this earnings season

Shares of UOB rose on Thursday (Jan 22) after Macquarie upgraded its call on the lender and raised its target price.

The counter climbed 2.2 per cent or S$0.81 to S$37.58 in early trade and hit a nine-month high. The last time UOB shares traded higher was on Apr 2, 2025, ShareInvestor data showed.

In a Wednesday note, Macquarie analyst Jayden Vantarakis upgraded UOB to an “outperform” rating and lifted its target price to S$41, 11.5 per cent above its latest closing price of S$36.77.

Vantarakis sees a potential “relative-value catch up play” for UOB as headwinds are expected to abate this earnings season.

“Seasonal trends are a headwind for non-interest income. Lower rates are a double-edged sword, pressuring revenues in FY2026 but benefiting valuations,” he said.

Vantarakis highlighted that loan volumes have risen, as the latest banking statistics from the Monetary Authority of Singapore in November reflect a “sustained pickup in lending”.This comes as interest rates are expected to continue trending downwards on Singapore dollar strength and US dollar weakness.

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“Whilst we expect some slowdown (for loan volume) in FY2026 to reflect front-loading impacts for manufacturing and exports, this sets a positive base for (the year’s estimated) loan momentum,” he said.

Vantakaris forecasts UOB’s quarterly provisions normalising after taking large one-off provisions in the third quarter, given that the bank has topped up allowances and as rate movements should be “marginally supportive of collateral values”.

Macquarie noted that quarter-on-quarter momentum for Q4 FY2025’s estimated profit after tax and minority interests could be affected by how Singapore banks have recorded lower trading and other non-interest income over the past five years, but UOB could benefit from a lower base in Q3 FY2025.

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While major US banks recently reported a quarter-on-quarter decline in overall wealth assets by 2 per cent, Singapore banks are expected to do better on wealth asset under management inflows, he added, given that the relative “safe-haven” status of the city-state’s banking sector.

However, earnings growth is expected to remain lacklustre in FY2026, which may present headwinds, Vantakaris said.

UOBwill be releasing its full-year financial results for FY2025 on Feb 24.

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