Singapore’s big banks have treated shareholders well over the past few years.
Now that we are firmly into 2026, the environment looks different.
Interest rates are easing, net interest margins are no longer expanding, and the easy gains from higher rates are behind us.
That shift has prompted a more important question: can United Overseas Bank (SGX: U11), or UOB, and Oversea-Chinese Banking Corporation (SGX: O39), better known as OCBC, continue paying attractive dividends when conditions are no longer working in their favour?
Dividend track record: consistency versus flexibility
UOB and OCBC both have solid dividend reputations, but their recent histories tell slightly different stories.
UOB has kept its dividend strategy pretty simple over the past three years: stick to a steady payout ratio, and throw in extras when business is strong.
In 2023, shareholders took home S$1.70 per share from interim and final dividends.
That went up to S$1.80 in 2024, and UOB sweetened the deal with two special dividends of S$0.25 each.
Looking at 2025, UOB delivered an interim dividend of S$0.85, slightly lower than the year before.
OCBC chose a steadier path.
Instead of offering special dividends, the bank quietly bumped up its regular payouts over time.
The bank’s interim dividend rose from S$0.40 per share in 2023 to S$0.44 in 2024, before easing slightly to S$0.41 in 2025.
A S$0.16 special dividend was declared in early 2025, but these have been less frequent compared to UOB.
Dividend yield comparison for 2026
| Metric | UOB (SGX: U11) | OCBC (SGX: O39) |
| Share Price (as of 12 Jan) | S$36.19 | S$19.90 |
| Trailing 12m Dividend | S$2.27 (including S$0.50 in special dividends) | S$0.98 (including S$0.16 in special dividends) |
| Dividend Yield | 6.3% | 4.9% |
| P/B Ratio | 1.1x | 1.55x |
At current share prices, UOB clearly stands out on headline yield.
As of 12 January 2026, UOB shares trade around S$36.19.
Over the past 12 months, the bank paid a total of S$2.27 per share, made up of an S$0.85 interim dividend, an S$0.92 final dividend, and S$0.50 in special payouts.
That works out to a trailing yield of roughly 6.3%.
OCBC’s numbers are more modest but still respectable.
With shares trading near S$19.90, its total dividend over the past year came to S$0.98 per share, including interim, final, and special dividends. That translates to a trailing yield of about 4.9%.
The gap looks large, but valuation helps explain it.
OCBC trades at a higher price-to-book multiple, reflecting investor confidence in its diversified earnings base, particularly wealth management and insurance.
UOB’s higher yield partly compensates for a business that still leans more heavily on traditional banking income.
Earnings outlook as rates fall
UOB is leaning into scale and regional growth.
For the first nine months of 2025 (9M2025), net interest income fell by 3% year on year to S$7 billion as net interest margin softened.
Management has been upfront that margins will normalise further, but the bank’s strategy is clear: extract sharpen its regional focus while reinforcing its fee income growth.
That effort is already showing up in fee income.
Wealth management and card fees have been growing at a healthy pace.
OCBC takes a different tack here, as it already has more diverse sources of earnings.
As interest rates declined, its net interest margin slipped to 1.84% in 3Q2025, down from 2.18% a year ago, which dragged down its net interest income.
Still, OCBC made up some of the difference with a jump in non-interest income, up 15% YoY to S$1.57 billion for the quarter, thanks to higher fees from wealth management, stronger trading income, and bigger contributions from insurance.
This mix of income streams has softened the impact on earnings as lending margins come back down to earth.
For 9M2025, fee income rose meaningfully, supported by wealth management, card spending, and a solid contribution from its insurance arm.
Wealth-related income now makes up a significant share of OCBC’s total revenue, providing a useful cushion when lending margins compress.
Loan and deposit growth have remained healthy, reflecting the depth of its customer base across Singapore, Greater China, and ASEAN.
Earnings Outlook: Can Dividends Be Sustained as Rates Fall?
As interest rates ease in 2026, dividend sustainability is increasingly driven by earnings mix rather than balance sheet strength alone.
Net interest margins are coming off their peaks, shifting the emphasis to fee income, loan growth, and cost control.
UOB has kept margin pressure in check so far.
In 3Q2025, net interest income slipped 3% year-on-year (YoY) to S$2.4 billion, with net interest margin (NIM) easing 0.13 percentage points to 1.91%.
This was partly offset by 5% loan growth, taking gross loans to a little over S$351 billion.
More importantly, net fee income rose 6% to around S$1.95 billion, driven by wealth management, cards, and loan-related activities.
At OCBC, margin compression has been sharper.
The bank’s 3Q2025 NIM fell to 1.84%.
Earnings stability has come from diversification.
Non-interest income climbed 15% YoY to S$1.57 billion in the third quarter, with wealth-related income (including insurance and private banking) bringing in S$1.62 billion, making up 43% of group income.
Insurance income from Great Eastern also jumped, up 38% compared to the previous quarter.
Balance Sheet Strength and Capital Buffers
Both UOB and OCBC enter 2026 with strong balance sheets, but their strengths show up in different places.
UOB isn’t rushing things after its push into the region.
By 3Q2025, its Common Equity Tier 1 (CET1) ratio stood at 14.6%.
That’s comfortably higher than what regulators demand, even after the bank paid out its interim dividend.
Asset quality held steady too, with the non-performing loan (NPL) ratio staying at 1.6%, the same as last quarter.
Notably, UOB set aside an additional S$615 million in general allowances during the quarter, lifting performing loan coverage to 1.0% and Non-Performing Asset (NPA) coverage to 100%, or 240% including collateral.
Management has been clear that this pre-emptive move will not affect the final 2025 dividend.
Funding and liquidity remain solid.
UOB’s loan-to-deposit ratio stood at 82.5%, while liquidity buffers were strong, with an all-currency liquidity coverage ratio (LCR) of 143% and a Net Stable Funding Ratio (NSFR) of 116%.
OCBC’s balance sheet looks more defensive on traditional metrics.
As at 3Q2025, its NPL ratio was 0.9%, unchanged YoY, with total NPA coverage at 160%.
Capital levels were also higher, with a CET1 ratio of 16.9% on a transitional Basel III basis, or 15.0% fully phased in.
Funding is where OCBC clearly stands out.
Customer deposits rose 11% YoY to S$411 billion, while CASA deposits grew 15%, lifting its CASA ratio to 50.3%.
This gives OCBC a meaningful funding cost advantage as rates fall.
Liquidity remained robust, with an all-currency LCR of 141% and NSFR of 114%.
In a falling-rate environment, OCBC’s funding mix gives it more breathing room, but neither bank is under pressure to cut dividends.
Get Smart: Dividends Depend on More Than Just Yield
Interest rates are falling and the impact is being felt.
The real test isn’t who offers the flashiest dividend yield – it’s who can actually keep those payouts going.
UOB and OCBC each have the financial muscle to keep writing those dividend checks, but they don’t power those payments the same way.
If you dig into what sets them apart, you’ll have a much better shot at building an income portfolio that holds up, even as the market keeps shifting.
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Disclosure: Joseph G. does not own any of the shares mentioned.
