DBS shares drop after Q4 profit falls 10%, missing forecast; flags 2026 earnings’ dip on rate headwinds

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DBS shares drop after Q4 profit falls 10%, missing forecast; flags 2026 earnings’ dip on rate headwinds​

Published Feb 09, 2026, 07:32 AM
Updated Feb 09, 2026, 11:02 AM

DBS will pay a final dividend of 81 cents per share, bringing total dividends for the year to $3.06 per share, up 38 per cent from the previous year.

PHOTO: ST FILE
Sheila Chiang

www.straitstimes.com

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SINGAPORE - DBS Group, Singapore’s largest bank by assets, missed analysts’ expectations as fourth-quarter net profit fell 10 per cent year on year, mainly due to lower net interest margin.

Earnings for the three months ended December was $2.26 billion from $2.52 billion a year ago, as stronger fee income and treasury customer sales were more than offset by rate headwinds, higher tax expenses and the absence of non-recurring gains recorded a year ago.

Excluding $100 million set aside as part of the bank’s corporate social responsibility commitment, net profit would have been $2.36 billion.

The net profit figure missed the $2.59 billion forecast by analysts in a Bloomberg poll.

DBS shares fell as much as 1.9 per cent to $58.18 in early trading on Feb 9, before paring losses to trade 0.5 per cent lower at $58.85 as at 10.44am. DBS hit an all-time closing high of $59.79 on Jan 29.

Group net interest income declined 4 per cent to $3.59 billion as net interest margin narrowed 22 basis points to 1.93 per cent due to lower interest rates and a stronger Singapore dollar.

Net interest margin refers to the difference between what banks earn on interest-earning assets, such as loans, and what they pay on interest-bearing liabilities, such as deposits, and it can be squeezed when interest rates fall.

DBS chief executive Tan Su Shan said in a Feb 9 statement: “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.”

The bank proposed a final ordinary dividend of 66 cents per share for the fourth quarter, an increase of six cents from the previous payout.

Together with a capital return dividend of 15 cents per share, the total dividend for the quarter is 81 cents.

This brings the total dividend for the year to $3.06 per share, up 38 per cent from the previous year.

DBS plans to continue paying capital return dividends of 15 cents per share per quarter for financial years of 2026 and 2027, barring unforeseen circumstances.

On a full-year basis, net profit was $10.9 billion, 3 per cent lower year on year, due to higher tax expenses from the consequential implementation of the 15 per cent global minimum tax.

Excluding the $100 million set aside for corporate social responsibility commitment, 2025 net profit would be $11 billion.

Group net interest income of $14.5 billion was modestly higher as the impact of lower Singapore and Hong Kong benchmark interest rates as well as foreign exchange translation from a stronger Singapore dollar was offset by balance sheet hedging and deposit growth.

Group net interest margin narrowed 12 basis points to 2.01 per cent.

Commercial book net interest income of $14.5 billion was 4 per cent lower year on year amid a lower net interest margin.

The bank expects 2026 net profit to be slightly below 2025 levels, but total income to be around 2025 levels despite rate headwinds.

Group net interest income is expected to be slightly below 2025 levels, as the bank assumes Singapore Overnight Rate Average of 1.25 per cent, two US Federal Reserve rate cuts and a strong Singapore dollar.

The bank further expects full-year impact of lower rates to be mitigated by deposit growth and to continue to capture hedging opportunities.

DBS is the first Singapore lender to report fourth-quarter earnings. Smaller peers UOB and OCBC are due to announce their results on Feb 24 and 25 respectively.