United Overseas Bank Limited (U11.SI) Stock: Can a 6.6% Dividend Yield Outweigh Margin and Credit Risks in 2026?

As of 8 December 2025, United Overseas Bank Limited (“UOB”, SGX: U11) sits at around S$34.5 per share, slightly down year‑to‑date but still one of Singapore’s core dividend banking plays. ^[1]
The stock combines a high dividend yield of roughly 6.6% with increased uncertainty over margins and asset quality heading into 2026. ^[2]

Below is a detailed look at the latest news, forecasts and valuation metrics around UOB stock as of 8 December 2025.

Key points

Q3 2025 earnings plunged 72% year‑on‑year after UOB booked S$1.36 billion in credit provisions, including a record S$615 million in pre‑emptive general allowances. ^[3]
Management expects net interest margin (NIM) to fall further in 2026 to about 1.75–1.80%, from an already lower 1.85–1.90% projected for 2025. ^[4]
Despite the earnings hit, UOB is maintaining its dividend stance, and the stock now offers a trailing dividend yield near 6.6% and trades at about 1.14x price‑to‑book and ~9.7x earnings. ^[5]
Analysts’ consensus rating is “Neutral”, with 12‑month target prices clustered around S$34.5–36, implying only low single‑digit upside from current levels. ^[6]

Where UOB stock trades today

As of 8 December 2025, UOB’s share price on the Singapore Exchange is around S$34.5. Market data providers show it down roughly 5% year‑to‑date, even as it has recovered from the lows seen during the Q3 results shock. ^[7]

On common valuation metrics:

Price‑to‑book (P/B): About 1.14x, based on a June 2025 book value per share of roughly S$30.3 and a share price near S$34.5. ^[8]
Trailing P/E (TTM): Around 9.7–9.9x according to multiple data providers. ^[9]
Dividend yield (TTM): Roughly 6.5–6.6%, based on trailing 12‑month dividends of about S$2.2–2.3 per share. ^[10]

Compared with its own history, these valuations sit slightly above book value but at a modest earnings multiple for a systemically important regional bank with an AA‑ range credit profile. ^[11]

The Q3 shock: provisions and margin pressure

Earnings collapse on record provisions

The turning point for sentiment in 2025 was UOB’s Q3 2025 earnings, released in early November.

Key figures from the quarter:

Net profit fell 72% year‑on‑year to S$443 million, versus S$1.61 billion a year earlier and well below analyst expectations of around S$1.35 billion. ^[12]
Total credit allowances reached S$1.36 billion, including around S$615 million of pre‑emptive general provisions. ^[13]

According to coverage from Reuters and the Financial Times, the bulk of the additional allowances relates to commercial property exposures in Hong Kong and the United States, where higher interest rates and a sluggish property market have increased default risk. ^[14]

The bank characterises these provisions as proactive buffer‑building rather than an immediate spike in realised losses, but the market has understandably focused on what they imply about asset quality and risk appetite.

Net interest margins: lower ahead

Alongside the Q3 results, management gave guidance that net interest margins are likely to compress further in 2026:

2025 NIM projection: around 1.85–1.90%
2026 NIM guidance:1.75–1.80%, reflecting expectations of lower benchmark rates and competitive pressure on loan yields. ^[15]

UOB also guided for:

Low single‑digit loan growth in 2026
High single‑ to double‑digit growth in fee income
Total credit costs in the 25–30 basis point range

In other words, volume growth and fee income are expected to partially offset margin compression, but the bank is entering 2026 from a weaker profit base due to the heavy provisions in 2025. ^[16]

How UOB now compares with DBS and OCBC

Singapore’s three big domestic banks – DBS, OCBC and UOB – all face the same macro headwinds of lower rates and slower regional growth. But recent articles in The Business Times and The Straits Times emphasise that UOB’s outlook is now seen as the most cautious of the trio. ^[17]

Several issues stand out:

Asset quality concerns:
UOB’s non‑performing loan (NPL) coverage ratio is around 100%, lagging DBS at roughly 139% and OCBC at about 160%. This has contributed to greater scrutiny of UOB’s Hong Kong and US commercial real‑estate books. ^[18]
Earnings divergence in Q3:
While DBS posted only a small profit decline and OCBC delivered resilient earnings, UOB’s profits were heavily dented by the large pre‑emptive provisions. Analysts interviewed by local media describe their stance on UOB as more cautious, even as they remain constructive on the Singapore banking sector as a whole. ^[19]
Market reaction:
Following the Q3 announcements, UOB’s share price fell about 3% in a single session, while DBS shares rose and the Straits Times benchmark index gained modestly – a clear signal that investors see UOB’s earnings trajectory as relatively weaker in the near term. ^[20]

This backdrop explains why, despite an attractive dividend yield, the market is not yet willing to re‑rate UOB to a richer multiple than its local peers.

Analyst forecasts and consensus on UOB stock

Target prices: modest upside at best

Across various data providers, analysts’ 12‑month price targets for UOB cluster within a narrow range:

Average target price:
- Around S$35.8 based on a consensus of 15 analysts, with a high estimate of S$40.1 and a low of about S$30.4. ^[21]
Another consensus snapshot:
- A more recent update places the average target near S$34.6, essentially in line with the current share price, implying almost no upside at today’s levels. ^[22]

At a price around S$34.5, this means the market is pricing UOB very close to broad analyst fair‑value estimates, with only low single‑digit potential upside on most models.

Rating stance: firmly “Neutral”

The consensus stance can be summarised as “hold, don’t chase”:

A widely cited survey shows 15 analysts covering UOB, with 5 recommending “Buy” and 10 advising “Hold”, resulting in an overall “Neutral” rating. ^[23]
MarketScreener’s compilation of broker actions through 2025 shows a steady stream of downgrades from “Buy” to “Hold/Neutral”, and target price cuts from the high S$30s and low S$40s toward the mid‑S$30s as the year progressed and provisions ramped up. ^[24]

Put simply, UOB is not broadly viewed as “broken”, but the risk‑reward looks balanced rather than compelling at current levels, particularly versus DBS and OCBC, which enjoy stronger near‑term sentiment.

Growth outlook: still growing, just from a weaker base

Earnings and revenue forecasts

Equity‑research platforms that compile forward estimates expect UOB to resume growth over the medium term, even after the Q3 stumble:

One widely used model forecasts earnings growth of about 11% per year and revenue growth of roughly 7% per year over the next few years, with EPS projected to expand at a similar pace. ^[25]

These forecasts build in:

Normalisation of credit costs after the pre‑emptive provisions
Moderate loan growth across ASEAN and Greater China
Resilient fee income from transaction banking, wealth management and cards

Local media commentary echoes this view: many analysts expect that 2026 earnings can rebound as one‑off provisions fade and income lines continue to grow, though they stress that the trajectory depends heavily on how quickly commercial real estate risks stabilise. ^[26]

Strategic drivers: ASEAN, supply‑chain shifts and data centres

Outside pure balance‑sheet repair, UOB continues to position itself as “the bank of ASEAN”, leveraging shifting supply chains and digital‑economy growth:

The bank operates a network of about 470–500 branches and offices in 19 markets, with major subsidiaries in China, Indonesia, Malaysia, Thailand and Vietnam. ^[27]
In October 2025, UOB highlighted strong growth in cross‑border business across ASEAN and Greater China, as companies reconfigure supply chains and re‑route trade through the region. ^[28]
Earlier this year, UOB and DBS jointly arranged a 6.7‑trillion‑rupiah (~US$411 million) financing for a large data‑centre campus in Indonesia, underscoring the bank’s role in funding digital‑infrastructure growth. ^[29]

These initiatives support the argument that UOB’s medium‑term growth story is intact, even if 2025’s provisions have temporarily obscured it.

Funding, capital and the latest bond deals

Another important piece of recent news is UOB’s activity in the covered‑bond market, which helps diversify funding and strengthens its liquidity profile.

In late November and early December 2025:

UOB priced £750 million of floating‑rate covered bonds due June 2029 under its US$15 billion Global Covered Bond Programme. The bonds pay compounded daily SONIA plus 0.52%, with the issue date expected on 8 December 2025, and are slated for listing on the Singapore Exchange. ^[30]
The bank also priced €850 million of 2.718% covered bonds due 2030, expanding its euro‑funding footprint. ^[31]

These transactions sit alongside the strong capital‑return narrative earlier in 2025, when UOB announced a multi‑billion‑dollar package including a special dividend and share buybacks following robust 2024 results. ^[32]

Rating agencies maintain strong AA‑style ratings on UOB’s covered‑bond programme, reflecting its solid asset quality at the programme level and robust over‑collateralisation. ^[33]

ESG and sustainability: a long‑term differentiator

From an environmental, social and governance (ESG) angle, UOB continues to emphasise “balancing growth with responsibility”:

The bank’s sustainability strategy is articulated through four pillars and is integrated with its broader corporate purpose of “building the future of ASEAN”. ^[34]
UOB’s 2024 Sustainability Report, released in March 2025, aligns with major global frameworks such as the Taskforce on Climate‑related Financial Disclosures (TCFD), and outlines its approach to net‑zero banking and climate‑risk management. ^[35]

ESG‑oriented investors will pay close attention to how UOB’s property‑loan provisions intersect with its risk‑management narrative: proactive provisioning can be seen as consistent with a conservative, sustainability‑aware stance, but heavy exposure to challenged commercial real estate will remain a discussion point.

Is UOB stock attractive at today’s price?

Putting the pieces together as of 8 December 2025:

Positives

High income: A ~6.6% trailing dividend yield and management’s commitment to maintaining dividends are key attractions for income‑focused investors. ^[36]
Solid capital and funding: Strong capital ratios, robust credit ratings and ongoing access to global covered‑bond markets reduce the probability of a balance‑sheet shock. ^[37]
Regional growth platform: UOB’s deep ASEAN and Greater China footprint positions it to benefit from re‑shoring and supply‑chain shifts, rising affluence and continued digitalisation in the region. ^[38]

Risks

Margin compression: Management is openly guiding to lower NIM in 2026, implying that earnings growth must rely on volumes, fee income and lower credit costs rather than spread expansion. ^[39]
Asset‑quality overhang: The record S$615 million in pre‑emptive provisions tied to Hong Kong and US commercial property exposures raises questions about the true underlying risk in the loan book, even if the provisions are conservative. ^[40]
Limited valuation upside (for now): With the share price trading close to consensus target prices and at roughly 1.1–1.2x book and ~9.7x earnings, the market is signalling that UOB is fairly valued given current uncertainties. ^[41]

For income‑oriented investors who accept cyclical earnings volatility, UOB may still look appealing as a high‑yield, systemically important regional bank. For investors seeking strong near‑term capital gains, however, the consensus view as of today is that other Singapore banks offer a cleaner growth story with fewer asset‑quality question marks.

Final word

United Overseas Bank Limited stock in December 2025 is not a simple bargain, nor a clear avoid. It is a high‑yield, regionally entrenched lender working through an aggressive clean‑up of its commercial real‑estate risk, while navigating lower margins and a more competitive lending environment.

How the story plays out in 2026 will depend on:

Whether provisions taken in 2025 prove sufficient,
The speed at which interest‑rate cuts compress margins, and
UOB’s ability to convert its ASEAN and digital‑infrastructure strategy into sustained fee and loan growth.

For now, the market – and most analysts – seem to be saying: collect the dividends if you like the risk, but do not expect dramatic re‑rating until the credit and margin clouds clear.