DBS Expects Slight Dip in 2026 Net Profit After Q4 Earnings Miss on Lower Interest Margins

Singapore’s largest bank, DBS Group, has maintained its expectation that net profit in 2026 will edge slightly lower than 2025 levels, after reporting a weaker-than-expected performance in the fourth quarter driven by declining net interest margins. The lender posted a 10% year-on-year drop in October–December net profit to S$2.26 billion, down from S$2.52 billion a year earlier, missing analysts’ estimates compiled by LSEG of around S$2.55 billion.

Following the earnings release, DBS shares slipped 1.5% to S$58.41 in early Monday trading, even as Singapore’s benchmark index inched higher. The bank’s results highlight the growing pressure on profitability across the region’s banking sector as interest rates moderate.

During the quarter, DBS’s group net interest margin fell to 1.93% from 2.15% a year ago, reflecting lower domestic interest rates. Net interest income was correspondingly affected, while return on equity declined to 13.5% from 15.8% in the prior year, signaling softer overall returns.

Despite these headwinds, DBS continued to see strong momentum in its wealth management business. Assets under management in the wealth segment rose 19% in constant-currency terms to a record S$488 billion in the fourth quarter, underscoring the bank’s strategic focus on fee-based income and affluent clients.

In presentation slides accompanying the results, CEO Tan Su Shan said group net interest income in 2026 is expected to be “slightly below 2025 levels,” based on assumptions that include an average Singapore overnight rate (SORA) of about 1.25%, two U.S. Federal Reserve rate cuts, and a stronger Singapore dollar. She added that overall net profit for the year is also likely to come in marginally lower than in 2025.

Credit costs rose sharply in the quarter, with provisions for bad loans jumping 81% to S$415 million, largely due to real estate exposure. However, DBS also wrote back S$206 million in general allowances, including amounts previously set aside for the same sector.

For shareholders, 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. DBS is the first Singapore lender to report this earnings season, ahead of United Overseas Bank and Oversea-Chinese Banking Corp, which are scheduled to announce results later in February.