SINGAPORE: Shares of DBS soared to a record high on Monday after Singapore's largest bank flagged an improvement in net interest income for 2025 and a dividend capital return plan, in line with a jump in fourth-quarter profit that met expectations.
Southeast Asia's largest bank by assets now expects 2025 group net interest income to slightly exceed last year's S$15.04 billion ($11.1 billion), an upgrade from its previous forecast of remaining at 2024 levels.
"Our previous guidance was actually for four U.S rate cuts in 2025, we are now assuming two rate cuts, and probably likely in the second half as opposed to the first half," DBS Deputy Chief Executive Officer Tan Su Shan said in a briefing on Monday.
Tan, who will take over as CEO in March from Piyush Gupta, said DBS is mindful of current geopolitical risks.
"We continue to stress test our portfolio very, very regularly whatever new news comes out from the Trump administration, we try to stay on top of it," she said.
Tan added that DBS expects more volatility in markets, rates and foreign exchanges.
Nevertheless, both Gupta and Tan said more intra regional trade such as in Asia in response to U.S. President Donald Trump 's trade tariffs could present opportunities for DBS.
"It depends exactly on how they levy tariffs, but it could actually have some interesting possibilities," Gupta said.
DBS's net interest margin, a key profitability gauge, rose to 2.15% during the quarter from 2.13% a year earlier.
DBS, the first Singapore lender to report this earnings season, said October-December net profit climbed to S$2.62 billion ($1.9 billion) from S$2.39 billion a year earlier, driven by growth in its commercial book and markets trading.
This matches the mean estimate of nearly S$2.63 billion from five analysts, according to LSEG data.
DBS stock hit a record high of S$46.5 earlier in the day, driving the Straits Times Index to its highest level ever.
The benchmark outpaced a 0.4% slump in broader Asian markets that were affected by repeated warnings of imminent tariffs from Trump, including on steel and aluminium.
DBS declared a final dividend of 60 Singapore cents per share, versus 54 cents declared a year ago.
It said it planned to introduce a capital return dividend of 15 Singapore cents per share per quarter to be paid out over 2025, and expected to pay out a similar amount of capital either via this plan or other mechanisms in subsequent two years.
The 2025 capital return dividend plan on top of a S$3 billion buyback announced in the third quarter signaled DBS's commitment to shareholder return while striving for long-term growth, analysts said.
Singaporean banks were forecast to post stronger profits for the fourth quarter, but growth could take a hit this year as Trump's tariffs and other policies threaten to undermine the global economy, analysts said.
Rival United Overseas Bank is next to report its financial results on Feb. 19. - Reuters
