DBS’s 2QFY2026 earnings should brings its 1HFY2026 bottom line to around 52% of RHB’s estimated FY2026 patmi of $11.21 billlion.
During the quarter, RHB expects DBS to post a low double-digit y-o-y increase in non interest income thanks to higher fees led by wealth management activities and from the low-base effect stemming from its “relatively more subdued” 2QFY2025. The estimate comes from DBS’s indication, at its 1QFY2026 briefing in late April, that its bancassurance was “strong”. The bank also said it saw “potential upside to its commercial book non-II growth guidance of a high-single digit if market sentiment stays strong”. That said, non interest income could remain flat on a q-o-q basis, notes RHB.
Net interest income (NII) for the 2QFY2026 is expected to drop on a y-o-y basis amid a lower net interest margin (NIM), cushioned by loans and asset growth. On a q-o-question basis, NII could tick “slightly higher” as the bank’s balance sheet grows.
“Recall that DBS sees decent loans growth in 2QFY2026 (1QFY2026 loans growth: +4% y-o-y, +7% annualised), backed by a strong deal pipeline in sectors such as energy and renewables, M&A (mergers and acquisitions) and real estate,” says the RHB team in its July 14 report.
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“Meanwhile, the recent banking statistics (May 2026) point to an acceleration in loans growth and loans could potentially outpace deposit growth q-o-q and y-o-y come quarter-end. This would be positive for banks’ NIM and NII,” the team adds.
RHB does not expect any “major surprises” for asset quality as well. “Based on discussions with peer banks, we learnt that asset quality has been stable and there has been no material developments observed during the quarter. As such, we are not expecting any major surprises for DBS on asset quality and its 17 basis points (bps) - 20 bps specific allowance guidance should be intact.”
“Moreover, it continues to hold on to SG$2.4 billion in GP (general provision) overlays, which should help to mitigate the impact of unexpected non-performing asset (NPA) incidences,” RHB adds.
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In 2QFY2026, the team expects “no surprises” in dividends. The bank is likely to declare an interim dividend of 66 cents and a capital return of 15 cents, which brings 1HFY2026 dividend per share (DPS) to $1.62.
DBS, which rallied to become the first Singapore stock to top $200 billion in market cap in July, now trades at over $70 per share.
Despite the premium valuation, RHB sees DBS as a “core holding” for investors due to its wealth franchise and “in-the-bag” DPS, as well as attractive yield.
The brokerage has maintained its “buy” call with a higher target price of $75.70 from $66.10 previously. While there has been no changes to its earnings forecasts, RHB’s new target price is based on a lower cost of equity (COE) and unchanged environmental, social and governance (ESG) premium of 2%.
As at 11.11am, shares in DBS are trading 8 cents higher or 0.11% up at $70.87.
