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Singapore’s largest bank DBS Group reported a 10 percent decline in fourth-quarter net profit on Monday, falling short of analyst expectations as the lender grappled with a lower net interest margin. The bank maintained its outlook for slightly lower net profit in 2026 compared to 2025 levels, citing volatile market conditions ahead.
DBS Group announced that its net profit for the October-December period dropped to S$2.26 billion from S$2.52 billion in the same quarter a year earlier. The result missed the mean estimate of nearly S$2.55 billion from analysts polled by LSEG, according to the bank’s financial statement released February 9.
Net Interest Margin Pressures DBS Earnings
The key driver behind the weaker-than-expected performance was lower markets trading income, according to CGS International analysts. Additionally, the bank’s net interest margin, a crucial profitability gauge, stood at 1.93 percent compared to 2.15 percent in the previous year. Net interest income faced headwinds from lower domestic interest rates in Singapore.
Return on equity also declined to 13.5 percent from 15.8 percent a year ago, reflecting the challenging operating environment. However, DBS CEO Tan noted that despite facing a “perfect storm” of declining rates and a strong Singapore dollar, the bank delivered record pre-tax profit and deposit growth in 2025.
Provisions for Bad Loans Surge
According to the financial statement, provisions for bad loans jumped 81 percent to S$415 million in the fourth quarter, primarily due to real-estate exposure. Meanwhile, the bank wrote back S$206 million in general allowances, including amounts previously set aside for real estate risks.
In contrast to the loan provisions, DBS saw positive momentum in its wealth management division. The lender’s wealth segment assets under management grew 19 percent in constant-currency terms to reach a new high of S$488 billion during the fourth quarter.
Employee Bonuses and Shareholder Returns
DBS announced a one-time bonus of S$1,000 for junior-ranked employees to recognize their contributions during a difficult year. The bank has allocated S$18 million for the payout, which will benefit more than 23,000 employees globally, including nearly 6,800 staff members in Singapore.
The special bonus comes after DBS awarded S$32 million in one-time bonuses to all staff members except senior managers last year. Tan stated that despite the challenging environment, the bank wanted to specially recognize the contributions of junior staff.
Additionally, DBS declared an ordinary dividend of S$0.66 per share and a capital return dividend of S$0.15 per share for the fourth quarter. The bank indicated plans to continue capital return dividends for financial years 2026 and 2027, barring unforeseen circumstances.
Market Reaction and Outlook
Shares of DBS closed 1.87 percent lower at S$58.19 on Monday, while the domestic benchmark index gained 0.54 percent. CGS International reiterated its “hold” rating on the stock, noting that the dividend outlook provides support.
Looking ahead to 2026, DBS forecasts net profit to come in slightly below 2025 levels as the bank navigates what Tan described as a volatile year. The CEO told clients to “buckle up” for continued market turbulence, while expressing hope that DBS will benefit from these global headwinds.
Other Singapore banks United Overseas Bank and Oversea-Chinese Banking Corp are scheduled to announce their quarterly results on February 24 and 25, respectively. Market observers will be watching closely to see if similar pressures on net interest margins affect the broader banking sector.
