---
endpoint: analytics
pattern: Financial Services
status: done
latency_ms: 231899
conversation_id: 00d89812-e30e-4189-bfcd-1386efa36fa4
citations: 0
created: 2026-05-31 18:43:37Z
---

# Is CLSA incrementally more positive/negative on DBS. If so, why?

## CLSA on DBS — Incrementally MORE CAUTIOUS (despite holding O-PF rating)

**Bottom line**: Across CLSA's last four "single-publisher" touchpoints on Singapore banks (13 May → 30 June 2025), the headline rating on DBS has stayed **Outperform (O-PF) with TP S$45.00**, but the *tone, relative preference, and forward-looking commentary have all drifted incrementally negative*. CLSA is sticking with DBS for the **yield**, not for the **upside**, and they continue to rank UOB ahead of it.

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### Trajectory of CLSA's view on DBS (May → June 2025)

| Date | Note | Rating | TP | What changed | Net incremental tone |
|---|---|---|---|---|---|
| 13 May 2025 | Singapore banks – *On the defensive* | O-PF (unchanged) | **Raised S$42.20 → S$45.00** [1] | Strongest 1Q25 (PPP +6% beat) [14]; PE re-rated from -1SD to long-term average [1] | Brief **positive** tactical lift (post-1Q beat) but UOB still preferred [3] |
| 20 May 2025 | Singapore banks – *Stuck in neutral* | O-PF | S$45.00 (**only +1.4% upside**) [6] | Investors prefer DBS but CLSA pushes UOB; sector "range-bound" [5] | More **cautious** — DBS now seen as roughly at fair value |
| 10 Jun 2025 | DBS – *Wealth of returns* (single-name) | O-PF | S$45.00 | "Limited upside to our target price, **strong yield support keeps us recommending O-PF**" [7] | **Defensive** — recommendation is now yield-anchored, not upside-anchored |
| 25 Jun 2025 | SG Strategy – *Strength in defence* | n/a (strategy) | n/a | DBS **NOT** in top picks; bank order: UOB > DBS > OCBC > SGX [8] | **Cooler** — sector range-bound; DBS dropped from top picks |
| 30 Jun 2025 | SG Financials – *Awaiting clarity* | n/a (sector data) | n/a | MAS May data: business loans slowing, 2Q-to-date loans **-1.7%** [12]; SORA still declining → NIM pressure [11]; "growth headwinds will be evident in the upcoming round of 2Q25 results" [10] | Most **negative** — flags downside risk to 2Q25 prints (Aug) |

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### Why CLSA is incrementally more cautious (the four reasons)

**1. DBS is now trading at/near CLSA's target price.**
- After the May TP raise to S$45.00, DBS already printed S$44.38 by 20 May — **only +1.4% upside** [6]. By the 10 June single-name update, the report itself concedes "limited upside to our target price" [7]. CLSA explicitly says DBS is "trading roughly at fair value now" [3].

**2. CLSA prefers UOB over DBS — consistently and on every axis they track.**
- 13 May: "Our order of preference remains unchanged, with **UOB preferred ahead of DBS and OCBC**" [3]. The justification: stronger 24-27CL EPS CAGR, better yield support, **lower rate sensitivity**, and more upside on DDM/PE/PB.
- 25 June Strategy: "**UOB remains preferred**, given good yield support, lower sensitivity to falling rates and more attractive valuations; followed by DBS" [8].
- Banks were "range-bound; still prefer UOB over 12m" [9]. DBS is conspicuously absent from the strategy team's top picks (DFI, KDC REIT, Sea, SCI, UOB).

**3. Rate / NIM headwinds are biting harder than expected.**
- 3M SORA continues to decline through June with swaps pointing to further falls [11] — and DBS is the most rate-sensitive of the three banks (the May 20 note's rate-sensitivity chart shows UOB has the **shallowest** slope, i.e., DBS bears the most NIM compression on a SORA fall).
- HIBOR collapse adds incremental (though "manageable") pressure: CLSA estimates ~2–4% group-PBT impact for DBS and OCBC from the HK dollar move [13]. The 10 June DBS note had to specifically defend the HIBOR impact as "manageable" — a tell that the question came up in the call CLSA hosted [7].

**4. 2Q25 setup is deteriorating into the August print.**
- 30 June note: "Singapore's May banking statistics from the MAS suggest **growth headwinds will be evident in the upcoming round of 2Q25 results in August**. Business loan growth is slowing… SORA trends will weigh on margins" [10].
- 2Q-to-date system loans **down 1.7%**, 2025-to-date down 0.4%, "putting mid-single-digit loan growth targets for the banks at risk" [12]. This puts DBS's loan-growth narrative under direct pressure heading into 2Q.

---

### The longer-term thesis is unchanged — that's why the rating still says O-PF

CLSA continues to frame DBS as a structural winner: "DBS's longer-term positioning as an **Asian wealth leader**… structural growth in this high ROE business should limit cyclical headwinds and solidify the lender's higher return profile" [7]. The 1Q beat was driven by **record wealth and loan-related fees plus strong trading** [14], and CLSA flags DBS as having the **highest CASA ratio, highest ROE, and the strongest capital return story** among the three locals.

What's incrementally negative is **not the franchise view — it's the risk/reward**:
- Share price has caught up with TP → minimal capital upside.
- Rate-cycle tailwind reversing → NIM pressure landing hardest on DBS.
- Loan growth softening → wealth/fees have to do more of the work.
- Sector is "range-bound" → strategy team would rather own UOB or rate-cut-beneficiary REITs.

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### Net read for a PM

CLSA's posture on DBS over the last ~7 weeks is best characterised as **"holding O-PF for yield, not for upside, and would rather own UOB."** The rating box hasn't changed but the qualitative read-across — bank preference order, top-picks exclusion, deteriorating 2Q25 setup commentary — points to **incrementally more negative on a 3–6 month tactical basis**, while leaving the structural Asian-wealth-leader thesis intact for the longer-dated view.

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**Sources**
[1] *Singapore banks – On the defensive* — CLSA (13 May 2025) — 607959041LinqAlpha.PDF
[2] *Singapore banks – On the defensive* — CLSA (13 May 2025) — 607959041LinqAlpha.PDF
[3] *Singapore banks – On the defensive* — CLSA (13 May 2025) — 607959041LinqAlpha.PDF
[4] *Singapore banks – Stuck in neutral* — CLSA (20 May 2025) — 607959993LinqAlpha.PDF
[5] *Singapore banks – Stuck in neutral* — CLSA (20 May 2025) — 607959993LinqAlpha.PDF
[6] *Singapore banks – Stuck in neutral* — CLSA (20 May 2025) — 607959993LinqAlpha.PDF
[7] *DBS – O-PF (Wealth of returns)* — CLSA (10 Jun 2025) — 607961689LinqAlpha.PDF
[8] *Singapore strategy – Strength in defence* — CLSA (25 Jun 2025) — 607962766LinqAlpha.PDF
[9] *Singapore strategy – Strength in defence* — CLSA (25 Jun 2025) — 607962766LinqAlpha.PDF
[10] *Singapore financials – Awaiting clarity* — CLSA (30 Jun 2025) — 607963079LinqAlpha.PDF
[11] *Singapore financials – Awaiting clarity* — CLSA (30 Jun 2025) — 607963079LinqAlpha.PDF
[12] *Singapore financials – Awaiting clarity* — CLSA (30 Jun 2025) — 607963079LinqAlpha.PDF
[13] *Singapore banks – On the defensive* (HIBOR table) — CLSA (13 May 2025) — 607959041LinqAlpha.PDF
[14] *Singapore banks – On the defensive* (DBS leads the pack) — CLSA (13 May 2025) — 607959041LinqAlpha.PDF

