By Amanda Lee
DBS Group, Singapore's largest bank, recorded a worse-than-expected decline in fourth-quarter net profit, dragged by tax expenses and a lack of one-off gains, sending shares lower.
Net profit for the final three months of 2025 fell nearly 10% to 2.36 billion Singapore dollars, equivalent to US$1.86 billion, as stronger fee income and treasury customer sales were more than offset by rate headwinds, higher tax expenses and the absence of nonrecurring gains recorded in the prior year, the bank said Monday.
The result missed the S$2.52 billion estimate of analysts in a Visible Alpha consensus.
DBS shares fell as much as 1.9% before paring losses to trade 1.3% lower at S$58.55 recently. The stock notched a closing record of S$59.79 in late January.
Total income was 3.2% lower at S$5.33 billion despite a 13.5% jump in commercial book net fee and commission income. Commercial book net interest income, a closely watched metric, dropped 6.2% to S$3.59 billion due to a narrower net interest margin, which fell to 2.34% from 2.77% a year earlier.
Banks' net interest margins--or NIM, the difference between what lenders earn on loans and pay on deposits--can be pressured when interest rates fall.
"We really had the perfect storm in 2025 in terms of rates," DBS Chief Executive Tan Su Shan said at a media briefing, citing factors including the strong Singapore dollar.
This year, the bank expects net profit to be slightly below 2025 levels, but total income to be around 2025 levels despite rate headwinds, Tan said.
DBS's net profit last year fell 3.2% to S$11.03 billion, lower than analysts' estimate of S$11.275 billion, while total income rose 2.7% to a record S$22.90 billion.
The lender proposed a final ordinary dividend of S$0.66 a share, an increase of 6 Singapore cents from the previous payout, and a capital return dividend of S$0.15 a share for the fourth quarter, for a total of S$0.81. The total dividend for the year was S$3.06, up 38% from the previous year.
DBS, which is also Southeast Asia's largest bank by assets, plans to continue capital return dividends of 15 Singapore cents a quarter for 2026 and 2027, barring unforeseen circumstances.
"While rate pressures and geopolitical tensions are expected to persist, the quality of our franchise and strong balance sheet provide a solid foundation for the year ahead," said Tan.
Despite the low-interest-rate environment putting pressure on banks' profits, shares in DBS have climbed nearly 60% since hitting a trough last April, leading gains by heavyweight lenders that have pushed the benchmark FTSE Straits Times Index to historic highs.
"We think Singapore is benefiting from the 'certainty premium,' given the extreme policy and political uncertainty among key global economies," Maybank Securities' Thilan Wickramasinghe said in an email. The government's equity market development program to boost the local stock market could also be providing some liquidity tailwinds, the analyst said.
DBS is the first of Singapore's three major lenders to report earnings. United Overseas Bank and Oversea-Chinese Banking Corp. are scheduled to report their results later this month.
Write to Amanda Lee at amanda.lee@wsj.com
(END) Dow Jones Newswires
02-09-26 0157ET
