DBS Profit Miss: Shares Slip After Weak Loan Margins
DBS reported a DBS profit miss in the fourth quarter. The result fell short of analyst expectations. As a result, shares slipped at the start of trading. The bank posted net income of S$2.36 billion. That figure dropped 10% from a year earlier. However, analysts had expected about S$2.57 billion. Lower lending margins and higher taxes hurt earnings. These pressures offset strong growth in wealth management.
Dividend Plan Remains Intact
Despite the DBS profit miss, the bank kept its dividend plan. It announced a total dividend of 81 Singapore cents for the quarter. Therefore, it aims to maintain payouts through 2027. Shares fell as much as 1.9% in early trading. Still, the stock has gained more than 4% this year..Chief Executive Tan Su Shan said challenges may continue. She pointed to rate pressure and geopolitical risks. However, she stressed the bank’s strong balance sheet. She expects 2026 profit to stay slightly below 2025 levels. In addition, wealth management may grow in the mid-teens.
Wealth Business Cushions Earnings
DBS saw its net interest margin shrink by 22 basis points. As a result, net interest income declined. However, fee and commission income rose 14%. Wealth management led that growth. For example, wealth fees jumped 24% to S$645 million. Assets under management reached record highs. Net new money also climbed strongly. This growth helped offset weaker loan margins. In addition, wealthy clients sought safe places for their money during regional tensions.
Loan Provisions and Tax Impact
Provisions for bad loans rose sharply. Specific provisions for overdue loans increased 81% to S$415 million. However, the bank offset some losses with a general allowance release. It also flagged a downgraded real estate exposure.
Higher taxes also weighed on earnings. DBS previously warned about a 15% global minimum tax. Analysts noted that most business lines still showed solid momentum. Therefore, they expect the shares to stay stable. DBS is the first Singapore lender to report results this season. Other major banks will release earnings later this month.
