- Global banks are enjoying broad-based earnings upswing as stronger capital-markets activity, improving fee income, and resilient balance sheets are driving earnings upgrades and share price rerating
- China’s tighter scrutiny of offshore wealth flow is unlikely to derail regional wealth management’s growth
- We remain highly selective in banking stocks; shareholder returns remain attractive with strong buyback momentum across the sector
- Attractive dividend yields of 4-6% across Asia banks continue to be in the spotlight amid a lower yielding environment
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Global banks are enjoying broad-based earnings upswing. Stronger capital-markets activity, improving fee income, and resilient balance sheets are driving earnings upgrades and share price rerating. US banks were the standout, with major banks beating expectations. Elevated market volatility, buoyant equities, and recovering deal activity have supported strong trading and investment banking revenues, while healthy capital positions underpin continued buybacks and dividends. Singapore banks delivered resilient earnings as they continue to benefit from structural wealth-management growth, helping offset NIM compression, alongside benign asset quality and attractive capital returns. Hong Kong banks saw improving revenue momentum, supported by firmer NII alongside continued strength in wealth management and fee income. Meanwhile, China banks are seeing relief from the prolonged margin squeeze, as lower deposit costs help stabilise NIMs, while broadly stable asset quality supports modest profit growth despite weak credit demand. Overall, the sector is benefitting from stronger fee pools, elevated market activity, manageable funding costs, and credit costs alongside excess capital, supporting higher valuations. While our core view is for the Fed to stay on an extended hold, potential Fed hikes would generally be positive for US, Singapore, and Hong Kong banks through higher asset yields and improved NIMs, particularly if deposit repricing remains contained. Although the benefit would be partly offset by softer loan demand and higher credit risks if rates stay elevated for longer.
China’s tighter scrutiny of offshore wealth flow unlikely to derail regional wealth-management’s growth. Greater oversight of cross-border investments, offshore account openings, and tax treatment could slow incremental mainland Chinese wealth outflows in near-term and raise compliance requirements for banks across both Hong Kong and Singapore. We continue to keep watch on the impact on net new monies and investment activities, rather than a material reversal of existing offshore assets. At the same time, regional private banks remain supported by broader structural wealth creation across Asia, diversification by high-net-worth clients and continued demand for offshore booking centres. Overall, we see the measures to potentially cause near-term moderation in China-linked wealth flows rather than a structural negative for Asian wealth management, with banks that have more diversified client bases and regional franchises likely to be relatively more resilient.
Remain highly selective in banking stocks; shareholder returns remain attractive. US banks stepped up capital returns in 2Q26, with stronger earnings, healthy CET1 buffers, and easing regulatory capital uncertainty supporting continued share buybacks and dividend increases. Buyback momentum remains strong across the sector, although the pace of deployment will still depend on valuations and balance sheet growth opportunities. In Asia, dividend yields across Singapore, Hong Kong, and China banks remain attractive at 4-6% and continue to provide valuation support in a lower-rate environment.
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Related insights
- Charles Schwab Corp09 Sep 2026
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- JPY and KRW leading Asian currencies 09 Sep 2026
Related insights
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- JPY and KRW leading Asian currencies 09 Sep 2026