Modi predicts that the bank's net interest rate (NIM) will decrease by 12 basis points year-on-year this year and another 10 basis points next year.

However, the bank has additional capital, and Modi believes that the bank's dividend per share will not change. OCBC and Dahua pay dividends every six months, and DBS announced a dividend of 75 cents per share in the first quarter of this year.

JPMorgan analyst Harsh Wardhan Modi lowered DBS's rating from overweight to neutral, and its target price was lowered from 49 yuan to 47 yuan. He also lowered Dahua's target price from 40 yuan to 37 yuan, maintaining a neutral rating.

As of around 10:10 am on Wednesday (May 21), the stock prices of the three banks weakened, Dahua fell 0.06% to 35.38 yuan, Overseas Chinese fell 0.62% to 16.11 yuan, and DBS fell 0.79% to 44.03 yuan.

Both the US dollar and interest rates slowed down, local banks' net interest yields will be compressed, and JP Morgan lowered its target prices for DBS and UOB.

Net interest rate declined mainly due to the decline in local three-month SGD overnight interest rate (SORA), one-month interbank offer rate (Hibor) in Hong Kong, and the risk-free benchmark guaranteed overnight financing rate (SOFR) in the past six months.

Modi said: "Our Forex team predicts that the dollar will remain weak, coupled with the Federal Reserve's interest rate cut, which will put pressure on banks' net interest rate returns."