DBS Group Holdings shares jumped after the lender reported earnings that met expectations and unveiled a investor payout plan.
Southeast Asia’s biggest lender plans to introduce a dividend of 15 Singapore cents per share per quarter to be paid out over 2025 as a start, DBS said Monday. A similar amount of capital either through this or other mechanisms in the subsequent two years is expected to be distributed, showing commitment to managing down its stock of excess capital, it said.
Looking into this year, net interest income will be slightly above 2024, based on two rate cuts expected in the second half, chief executive officer (CEO) Piyush Gupta and his deputy Tan Su Shan said in a presentation accompanying the earnings. That’s better than the guidance made at the third-quarter results when the bank guided for similar levels.
The bank’s results “demonstrated strong underlying business performance,” Sam Wong and Shujin Chen, analysts at Jefferies in Hong Kong, said in a report published after the earnings. Singapore banks’ capital return is tied to longer-term growth, they said.
The stock rose as much as 4.1% at the market open, the most since November. DBS has gained about 5% since the start of the year, taking the market value just about US$4 billion ($5.4 billlion) short of US$100 billion that would make DBS the first lender from Southeast Asia to reach such a level. DBS shares rose to a record of as much as $46.50.
The lender had reported fourth-quarter profit that met expectations, buoyed by wealth fees and gains in lending. Net income, excluding one-time items, rose 10% to $2.62 billion in the three months ended Dec 31, 2024 it said. That was roughly in line with the $2.65 billion average estimate of analysts surveyed by Bloomberg News.
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Fee and commission income for the commercial book gained 12%, outpacing a 5% growth in net interest income, the bank said. The fee growth was primarily from a surge in wealth management fees as clients’ assets under management rose to a record.
Net new money for its wealth business came in at $21 billion in 2024, chief financial officer (CFO) Chng Sok Hui said at a briefing. This has exceeded $20 billion for the three years through 2024, with 40% of the flows from North Asia, according to Gupta at the same event.
DBS’ earnings reflect how its robust wealth-management business is helping drive profitability amid tepid lending. Singapore’s economic growth is projected to moderate over 2025, its central bank expects.
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The US Federal Reserve (US Fed) lowered its benchmark rates three times last year. While more reductions are expected, analysts and investors are forecasting fewer cuts than previously thought after President Donald Trump took office.
Steering DBS through a softer economic patch and declining rates are set to be among the immediate tasks for incoming CEO Tan, who takes over from Gupta in March.
Apart from the upward revision for 2025 net interest income, DBS maintained other projections. This included a lower annual profit this year, and high-single digit percentage growth for non-interest income for the commercial book. Under Gupta’s 15-year tenure, DBS’s returns to investors are among the best at global banks.
“Piyush is a hard act to follow,” Tan said at the briefing. While she will have a different style of management, Tan said the bank will stay focused on areas like high returns and digital transformation.
DBS is the first of major Singapore banks reporting results for the period. Rivals United Overseas Bank and Oversea-Chinese Banking Corp will report results later this month.
