Singaporean banks' return on equity are expected to improve, partly driven by their wealth management business, CGS International analysts say in a note.

Continuous capital inflow and growing loan demand could also boost 2027 net interest margins for DBS Group, United Overseas Bank and Oversea-Chinese Banking Corp. and lift their net interest income.

CGS International upgrades its rating for Singapore's banking sector to overweight from neutral. The brokerage names DBS as its top sector pick, citing its relatively high 2026 dividend yield of 5.2%.