DBS shares hit $50 after Q2 profit beats forecast on strong wealth fees, trading income

SINGAPORE – Shares of DBS hit a new high on Aug 7 as Singapore’s largest bank reaffirmed its full-year outlook after posting a better-than-expected 1 per cent rise in earnings for the second quarter of 2025.

Net profit for the three months to June 30 was $2.82 billion, up from $2.8 billion in the year-ago period, beating the $2.79 billion forecast by analysts in a Bloomberg poll.

The bank declared an interim dividend of 60 cents a share and a capital return dividend of 15 cents a share. This brings the quarter’s total dividend payout to 75 cents a share, up from the 54 cents in the year-ago period.

DBS said that it has bought back about $370 million worth of shares under the $3 billion share buyback plan so far, representing around 12 per cent of the programme.

Its shares hit a record intra-day high of $50 at around 3.30pm on Aug 7, up 2.4 per cent. The stock closed trading 1.8 per cent higher at $49.75.

DBS chief executive officer Tan Su Shan said at a results briefing that it was a “tough” quarter, given tariff uncertainties and falling interest rates, but the bank mitigated these headwinds with balance sheet management and deposit volume growth.

DBS maintained its 2025 targets – which include group net interest income to come in at slightly above 2024 levels, commercial book non-interest income growth to be in the mid- to high single digits, and net profit to be below 2024 levels.

Ms Tan explained that the bank projected net interest income in 2025 to exceed 2024 levels despite declining interest rates as higher volumes can drive net interest income growth.

“Focus on net interest income. Don’t focus on net interest margin, because it will go down with the markets, but net interest income can go up with volumes and that’s how you mitigate that. That will keep you resilient and hopefully keep you ahead,” she said.

She expects deposit growth and non-trade loans in sectors such as data centres to drive a significant portion of net interest income growth for the rest of the year.

DBS is also beginning to see deals, especially those that were put on pause in the second quarter due to uncertainty, come back.

On US President Donald Trump’s doubling of tariffs on India’s goods to 50 per cent, Ms Tan said that the first-order impact on DBS is “almost negligible”, given that the bank is not geared into sectors that will be affected, such as textiles, jewellery and apparel.

Interest rate volatilities also offer opportunities for corporate clients to hedge, she said. “We are seeing that happening right now... for example, when rates come down, you lock in a lower fixed rate.”

Ms Tan said: “Building resiliency in your balance sheet, building resiliency in your operating income, but continuing the structural growth path of things like wealth management, global transaction services, digitalisation, et cetera, means you can mitigate these market volatilities.”

For the second quarter, the bank’s commercial book net interest income fell 4 per cent to $3.63 billion. This came as net interest margin declined 28 basis points to 2.55 per cent from 2.83 per cent a year earlier as interest rates trended lower.

The impact of lower interest rates, though, was mitigated by balance sheet hedging and partly offset by strong deposit growth, which funded loans and an increased deployment into liquid assets.

Customer deposits grew 4 per cent to nearly $574 billion in the quarter from $551 billion a year ago. Loans rose 2 per cent to $433 billion, led by non-trade corporate loans from broad-based growth across industries. 

Ms Tan said deposits continued to grow in July and the bank expects the momentum to continue for the rest of the year.

The bank also improved its non-performing loan ratio to 1 per cent from 1.1 per cent in the quarter.

Ms Tan noted that DBS’ second-quarter net profit was boosted by strong wealth fees, treasury sales and trading income.

Net fee and commission income in the quarter grew 11 per cent to $1.17 billion from $1.05 billion a year earlier, led by the wealth management segment, which saw fees surge to $649 million in the quarter, up from $518 million a year earlier.

Treasury customer sales and other income increased 9 per cent to $522 million from $478 million a year ago.

Markets trading income soared 124 per cent to $418 million from $187 million a year ago, thanks to lower funding costs and a more conducive trading environment.

Ms Tan added that customers are looking to diversify into Asian currencies, while initial public offerings in markets such as Hong Kong and Singapore have driven a flow of funds back into Asian markets and wealth management.

The bank also observed a growing trend of people exploring estate planning, regardless of their wealth.

The bank’s first-half net profit fell 1 per cent to $5.72 billion from $5.76 billion a year ago.

Net interest income in the first half fell 1 per cent to $7.34 billion from $7.42 billion, weighed by lower interest rates.

Net fee and commission income, a key component of a bank’s non-interest income, was up 17 per cent to $2.44 billion in the first half from $2.09 billion.

Return on equity fell to 16.7 per cent in the second quarter from 18.2 per cent in the same period a year ago.

DBS reported earnings on the same day as UOB, whose earnings fell 6 per cent to $1.34 billion, missing expectations. UOB trimmed its outlook for 2025, citing the impact of US tariffs.

The release of their results followed that of OCBC Bank, which on Aug 1 posted a smaller-than-expected drop in net profit, but cut its 2025 net interest margin expectations and flagged tariff headwinds.