DBS CEO Tan Su Shan urges investors to ‘buckle up’ for volatile 2026; income outlook steady despite Q4 profit miss

[SINGAPORE] Investors should “buckle up”, as 2026 is shaping up to be a volatile year, said DBS chief executive Tan Su Shan.

“(January) feels like a year condensed into a month, and people are getting used to such volatility,” Tan said at the lender’s fourth-quarter 2025 results briefing on Monday (Feb 9).

But she expects that the bank will continue to benefit from customers’ search for safe havens, as the bank positions itself as a “safe, long-term, dependable and future-forward bank”.

The CEO said: “We will maintain our cost, credit and operational discipline, and all this underpinned by continued work to make our tech resilient through automation and artificial intelligence.”

Tan sees total income for 2026 to be around 2025 levels and net profit to come slightly below 2025 levels.

Net interest income will likely be lower due to lower interest rates and a strong Singdollar, but this can be mitigated by a strong growth in deposits and volumes, she noted.

As for commercial book non-interest income, it should see high-single-digit growth, led by mid-teens growth in its wealth management business, the CEO added at the briefing.

Meanwhile, Tan forecasts a cost-to-income ratio in the low 40 per cent range and specific provisions within 17 to 20 basis points (bps) of loans, with the potential for further general provision writeback.

Q4 missed forecasts

This comes as the lender posted a 10 per cent decline in Q4 net profit to S$2.26 billion, compared with S$2.52 billion for the year-ago period.

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Excluding the S$100 million set aside for corporate social responsibility (CSR) commitments, net profit for the fourth quarter ended Dec 31, 2025 would have been S$2.36 billion.

This missed the S$2.59 billion consensus forecast in a Bloomberg survey of six analysts.

Group net interest income was down 4 per cent at S$3.59 billion, as net interest margin fell 22 basis points to 1.93 per cent amid lower interest rates and a stronger Singdollar.

This was mitigated by balance sheet hedges and strong deposit growth.

Deposits rose 3 per cent during the quarter to S$610 billion, while loans were up 2 per cent at S$451 billion.

As deposit growth outpaced loan growth, surplus deposits were deployed into high-quality liquid assets.

Meanwhile, customer-driven non-interest income – which includes fee income and treasury customer sales – rose 13 per cent to S$1.58 billion.

Fee income was up 12 per cent at S$1.38 billion, led by a 24 per cent growth in wealth management.

The bank saw S$12 billion in net new money for Q4, bringing its asset under management for the year to S$488 billion.

For the full year, net profit fell 3 per cent to S$10.93 billion, reflecting higher tax expenses from the consequential implementation of the 15 per cent global minimum tax.

Excluding the S$100 million in CSR commitments, full-year net profit would have been S$11.03 billion, missing the S$11.27 billion consensus estimate in a Bloomberg survey of 15 analysts.

FY2025 return on equity stood at 16.2 per cent, from 18 per cent for FY2024.

Tan said the bank had the “perfect storm” in 2025, with lower interest rates, a strong Singdollar and higher tax rates. Yet it still managed to post record highs.

Tan said she was “more pleased” with the record-high volume, including deposit growth and net new money growth, as it signals structural growth.

Full-year deposit growth of S$64 billion was the “strongest in history”, while net new money inflows for 2025 was a record S$39 billion.

“This suggests that our engines are firing,” she said.

Hong Kong real estate downgrade

Meanwhile, the bank’s non-performing loans ratio for Q4 was at 1 per cent, down from 1.1 per cent a year earlier.

Specific allowances in Q4 rose to 36 bps of loans, from 20 bps a year earlier, as DBS made a “prudent downgrade” of a previously watch-listed Hong Kong real estate exposure.

“We reviewed the credit and took a prudent decision to downgrade it to a non-performing loan, following our subjective default assessment,” said chief financial officer Chng Sok Hui.

While the customer has already been watch-listed for two years, Chng said it has not defaulted yet.

The bank also sets aside general allowances once a case has been put on the watch-list. These allowances would be released in the event the case is classified as a non-performing loan, she noted.

With an additional S$2.4 billion in general allowance overlays, Tan said that the general allowance reserves “remain sufficient”, and that the bank is “comfortable on our exposures”.

For Q4, the lender declared an ordinary dividend of S$0.66 per share and a capital return dividend of S$0.15 per share.

This brings the quarter’s total dividend payout to S$0.81 per share, compared with S$0.60 per share for the year-ago period.

The latest payouts would bring total dividend for the year up 38 per cent to S$3.06 per share, comprising S$2.46 of ordinary dividends and S$0.60 of capital return dividends.

DBS plans to continue paying its capital return dividend of S$0.15 per share per quarter for financial years 2026 and 2027, barring unforeseen circumstances.

DBS shares fell 1.9 per cent to S$58.19 at the close on Monday.