Three sessions was all it took for Singapore's banking stocks to surrender gains built up over more than two months.

The slump kicked off last Wednesday (7 October), lining up with Citi cutting Oversea-Chinese Banking Corporation (SGX: O39), or OCBC, from neutral to sell.

OCBC shares dropped by more than 5% that session.

DBS Group Holdings (SGX: D05) and United Overseas Bank (SGX: U11), or UOB, slipped 1.4% and 2.9% respectively.

By Friday's close, OCBC shares sat roughly 11% beneath their 52-week peak. UOB was off by nearly 11% and DBS by 7.2%.

If you hold bank shares, there is no need to panic.

Is this the worst of it?

The decline feels severe because it happened so quickly.

Widen the view from three days to three months, and DBS and OCBC shares are sitting roughly where they traded in late July.

The three banks account for 57% of the Straits Times Index (SGX: ^STI), or STI.

That index finished Friday only about 7.3% below its 52-week peak.

Put differently, we are not yet at a 10% drop, so we are not in market correction territory — not yet.

You should not be shocked if one arrives.

Historically, the STI has declined by 10% or more in roughly eight out of every 10 years.

Was Citi correct to label OCBC a sell?

Citi anticipates OCBC's third-quarter earnings coming in flat year on year following an exceptional second quarter.

It also anticipates higher fixed deposit rates squeezing OCBC's margins, and it casts doubt on OCBC's valuation.

Here is the point: before Wednesday's downgrade, OCBC shares were already well above their typical valuation multiple.

Before Wednesday's downgrade, investors were paying around 2.3 times book value.

For context, the shares have historically averaged at roughly 1.2 times.

At 2.3 times, the market simply needed a reason to sell.

Any reason would suffice.

All three banks were overdue for a pullback on valuation alone, whether Citi said so or someone else did.

On Friday (9 October 2026), OCBC traded at around 2.1 times book value.

Simply put, the shares are cheaper, but they are far from cheap.

Has anything shifted within the banks?

The brief answer is no.

The banks last reported in early August, and those figures still hold.

In the first half of 2026 (1H 2026), OCBC grew total income by 11% year on year to S$8 billion.

Net interest income fell 3% as the bank's interest margin narrowed from 1.98% a year ago to 1.73% in 1H 2026.

Non-interest income more than filled the gap.

It rose 36% to S$3.51 billion, backed by net fee income, which grew 26% to S$1.41 billion.

OCBC raised its interim ordinary dividend by 15% to S$0.47 per share, representing a payout of 50% of profit.

Management still expects total income to grow in 2026.

It expects net interest income to dip slightly.

On the other side, the US Federal Reserve raised interest rates in September 2026 for the first time since July 2023, a move that could slow the decline in margins over time.

We will have to wait for management to comment on its outlook when OCBC reports its next earnings.

What should you monitor when the banks report?

The banks should report third-quarter results in late October or early November.

On the lending side, expect net interest margins to keep slipping.

At the same time, you want loan growth to be strong enough to offset that decline.

OCBC currently expects to deliver high-single to low-double-digit loan growth in 2026.

On the non-lending side, watch whether wealth management fees and insurance income keep growing.