---
endpoint: analytics
pattern: Financial Services
status: done
latency_ms: 395571
conversation_id: 421dda18-ba82-4bb5-9e45-ef8ec3ed5afb
citations: 22
created: 2026-05-31 19:42:08Z
---

# Provide a one‑year narrative of DBS, outlining how business performance, market conditions, and company actions shaped investor sentiment and valuation.

# DBS Group Holdings (D05 SP) — One-Year Narrative (June 2025 – May 2026)

## Opening Frame: The "Perfect Storm" Year

CEO **Tan Su Shan** described 2025 as having "the perfect storm" in macros — collapsing Sora and Hibor, a strong Singapore dollar, the consequential implementation of the **15% global minimum tax**, and persistent geopolitical noise (US "Liberation Day" tariffs, Middle East tensions) [5]. Despite these headwinds, the bank delivered four consecutive quarters of record total income, a step-up in dividend, and a c.30%+ share-price re-rating from ~S$44 in mid-2025 [21] to ~S$58-59 by early 2026 [25][26]. The narrative arc moved through five distinct phases.

---

## Phase 1 — Sell-Side Pivots from Rates to Wealth (May–Jun 2025)

After a strong 1Q25 print (released early-May), CLSA's "On the defensive" (13 May 2025) noted that **DBS delivered the strongest performance in 1Q, with pre-provision profit exceeding our estimate and the consensus by 6%** [18], driven by record wealth and loan-related fees and strong trading. CLSA lifted the DBS target price from **S$42.20 to S$45.00**, re-valuing the PE component at its 10-year average (10.3x 12m forward PE) rather than -1 standard deviation, on the view that macro headwinds were less severe than a month earlier [19]. Rating maintained at **O-PF**.

The CLSA investment thesis re-anchored on structural strengths rather than the rate cycle: **"With the highest CASA ratio among the three domestic banks, DBS has a relative funding cost advantage… The bank has the highest ROE amongst peers and also, in our view, is more explicit on capital efficiency parameters"** [20]. The capital-return policy was reiterated — S$0.75/share quarterly dividend (S$0.60 ordinary + S$0.15 capital return) safe so long as ROE remained 15–17% [22].

By 20 May 2025 ("Stuck in neutral"), price at S$44.38, TP S$45.00 — implied upside +1.4% [21]. By 10 June ("Wealth of returns"), CLSA hosted a call with DBS that crystallized the reframing: **"Shorter-term worries on rates, loan growth and macro uncertainty should not detract from the strength of DBS' longer-term positioning as an Asian wealth leader… While rates are under pressure, the focus should be on NII and ROE accretion"** [28]. The thesis explicitly conceded that the in-place hedging strategy was a finite buffer (rolling off by end-2026), pivoting the bull case to structural wealth growth.

---

## Phase 2 — 2Q25 (Aug 2025): "Solid Q2 in spite of a perfect storm"

DBS reported **2Q25 PBT +5% YoY to SGD 3.39B; net profit SGD 2.82B** (+1% YoY despite global-minimum-tax drag), with 1H25 PBT a record SGD 6.83B [14]. CEO Tan said the team **"delivered a solid Q2 in spite of seeing what were really factors that would include a perfect storm"** — plunging Sora and Hibor, a strong Sing dollar, Liberation Day uncertainty, and Middle East tensions [27].

- **NIM:** Group NIM declined 7bp QoQ and 9bp YoY to **2.05%**; hedging and balance-sheet growth mostly offset [16].
- **Deposits:** 1H deposit gathering +SGD 29B (+5%); majority CASA, plus retail flow-back from T-bills.
- **Wealth:** **AUM SGD 442B (+16% YoY constant currency)** to record; wealth fees +30% YoY; NNM SGD 9B in 2Q, above the SGD 5–6B run-rate [18 superseded by recent data, see 17]. Specifically: "Assets under management grew 16% year-on-year in constant currency terms to a new high of SGD 442 billion" [18].
- **Capital return:** SGD 370M of the S$3B share buyback program completed (~12% of program); annualized dividend yield 6.1% [17]. The combination of buyback + step-up dividend signalled management was actively managing down excess capital.

Investor sentiment shifted from neutral toward constructive as the print proved the deposit-and-fees-offset thesis worked even with Sora plunging.

---

## Phase 3 — 3Q25 (Nov 2025): Records broaden

3Q25 results delivered **record PBT of SGD 3.48B (+1% YoY) and ROE of 17.1%** [11]. Net profit SGD 2.95B (-2% YoY) was held back by the global minimum tax.

- **Deposits exploded:** +SGD 19B QoQ in constant currency (+3%); **CASA inflow of $17B, most in Sing dollars; CASA ratio rose to 53%** [12]. Surplus deposits were deployed into HQLA, accretive to NII and ROE.
- **Fees:** 3Q gross fee income SGD 1.58B record; wealth fees +31% YoY to SGD 796M new high; 9M fee income SGD 4.48B record.
- **Markets trading:** 9M SGD 1.22B (+60% YoY), second-highest on record.
- **NIM:** Compressed 9bp QoQ to 1.96% from lower Sora.
- **Asset quality:** NPL stable 1.0%; SP 13bp 9M (below guidance).
- **Dividend:** Maintained at SGD 0.75/share; annualized yield 5.6% on then-share price.

**2026 guidance issued in Nov:** Management assumed Sora steady at ~1.25% (60bp YoY decline) and three Fed rate cuts. They guided **"total income to hold steady to 2025 levels in spite of significant interest rates and FX headwinds"**, with commercial-book non-II in high single digits, wealth management and FICC mid-teens, SP normalizing to 17–20bp, and net profit "slightly below 2025 levels or pretty flat" [13]. The GP overlay of SGD 2.5B was described as "more than adequate."

The Q3 print validated the wealth + deposit thesis and capped the second half of 2025's re-rating leg.

---

## Phase 4 — FY2025 Results & Dividend Step-Up (Feb 2026)

Q4 2025 / FY 2025 results (announced 8 Feb 2026):

| Metric | FY 2025 | Comment |
|---|---|---|
| Total income | SGD 22.9B (record, +3%) | Despite Sora/Hibor each down ~200bp |
| Pre-tax profit | SGD 13.1B (record) | |
| Net profit | **SGD 11.0B (-3% YoY)** [4] | Hit by SGD 400M extra tax from 15% global minimum tax [6] |
| ROE / ROTE | 16.2% / 17.8% | |
| Group NII | SGD 14.5B (record) | Hedging + deposit growth offset rate plunge |
| Markets trading | **SGD 1.37B (+49%) — highest since 2021** [8] | |
| Deposits | **+SGD 64B (+12%) — "the largest absolute increase in the bank's history"** [7] | |
| Wealth AUM | SGD 488B (+19% YoY); NNM SGD 39B record | |
| NPL ratio | 1.0% | One real-estate exposure on watchlist 2 yrs prudently downgraded to NPL (4Q SP SGD 415M) [6] |
| CET1 (transitional / fully phased) | 17.0% / 15.0% | |

**Q4 net income SG$2.36B vs StreetAccount SG$2.51B** — a small miss [26]. But the headline was the **dividend step-up**: ordinary lifted by SGD 0.06 to **SGD 0.66**, with the **SGD 0.15 capital-return dividend maintained each quarter through 2026 AND 2027** [9] — a two-year extension that put a hard floor under yield support. Total Q4 dividend SGD 0.81/share; annualized SGD 3.24.

CEO Tan summed up the year: **"we really had the perfect storm in 2025"** — and yet record group total income, record group NII, record fees, record PBT, record deposit growth (+12%), record NNM (SGD 39B), and record AUM [5]. She framed DBS around three "moats": data, trust, and culture, with AI implementation as an operating-leverage driver.

The 2026 outlook was, however, a clear caution: **"for net profit, we're looking at slightly below 2025 levels"** [10], on assumptions of two more rate cuts and continued strong Sing dollar.

Share price reacted constructively: SG$59.30 at Q4 release date, modestly higher after takeaways (SG$58.03 on 12 Feb).

---

## Phase 5 — 1Q26 Beat & Broker Upgrades (Apr–May 2026)

The narrative inflection came with the Q1 2026 print on 29 April 2026:

- **Net profit SG$2.93B vs StreetAccount SG$2.82B — beat by 4%** [25]. Press release language: **"we announced first quarter net profit of SGD 2.93 billion as total income reached a new high"** [1] (total income SGD 5.95B record). ROE 17%, ROTE 18.7%.
- **NIM compression continued but slowed** — 1.89% (-4bp QoQ). The starkness of the rate environment was crystallized in the CFO's remark: **"Singapore interest rates represented by Sora fell from 200 – 2.54% in first quarter 2025 to 1.07% in first quarter 2026"** [2] — Sora less than half a year earlier.
- **Wealth franchise hit a new high:** **"AUM reached a record SGD 492 billion, up 17% year-on-year in constant currency terms"** [3]; wealth fees +25% YoY; NNM SGD 10B in the quarter.
- **Deposits +SGD 19B in constant currency; CASA ratio rose to 55%** — the structural deposit machine accelerating.
- **Credit costs benign:** SP 14bp, BELOW the guided 17–20bp range. NPL ratio stable 1.0%.
- **Dividend SGD 0.81/share** (SGD 0.66 ordinary + SGD 0.15 capital return) — consistent with the FY25 step-up.

Sell-side reaction was decisive. On **1 May 2026**:
- **Macquarie upgraded DBS to Neutral from Underperform** at SG$58.50 [24].
- **CGS International upgraded DBS to Add from Hold** at the same level [23].

These upgrades — particularly Macquarie removing its bear stance — capped the year's re-rating and validated the "wealth + capital return" thesis CLSA had spelled out 11 months earlier.

---

## Valuation & Sentiment Arc

| Date | Event | Price (S$) | Sentiment shift |
|---|---|---|---|
| May 2025 | CLSA "On the defensive" — TP raised to S$45 (O-PF) | ~43.71 | Constructive but UOB preferred peer |
| Jun 2025 | CLSA "Wealth of returns" — reframes thesis on wealth | ~44.4 | Structural growth narrative gains traction |
| Aug 2025 | 2Q25 net profit SGD 2.82B; H1 records | — | Thesis validated despite rate plunge |
| Nov 2025 | 3Q25 PBT record SGD 3.48B; ROE 17.1% | — | Multiple expansion as deposits explode |
| Feb 2026 | FY25 records; div step-up; cap-return extended to 2027 | ~58–59 | Yield floor reinforced |
| Apr–May 2026 | 1Q26 beats consensus; Macquarie + CGSI upgrades | ~58.6 | Bear capitulation; re-rating complete |

---

## What Shaped Valuation: The Three Drivers

**1. Yield support became the floor.** The CLSA capital-return analysis early in the period flagged DBS's S$0.75 quarterly payout (S$0.60 ord + S$0.15 cap return) was safe at 15–17% ROE [22]. Management subsequently extended the SGD 0.15 capital-return dividend through 2027 [9], crystallizing what had been a soft commitment into a hard two-year visibility window. Annualized yield ranged 5.6%–6.1% across the year [17], anchoring the share against rate worry.

**2. Structural wealth dwarfed cyclical NIM compression.** AUM marched from SGD 442B (Jun 2025) [18] to SGD 488B (Dec 2025) to SGD 492B (Mar 2026) [3]. NNM totalled SGD 39B in FY25 — a record. Wealth fee growth ran +25–31% YoY through the period. This is the engine CLSA flagged early — "Asian wealth leader" [28] — and it executed.

**3. Operational resilience monetized volatility instead of fearing it.** Markets trading income reached **SGD 1.37B (+49%) for FY25, highest since 2021** [8], because the team treated rate volatility as a hedging-and-trading opportunity rather than a threat. The proactive balance-sheet hedge book (fixed assets at SGD 210B) plus aggressive deposit gathering (+SGD 64B record in FY25 [7]; +SGD 19B in 1Q26) cushioned the c.200bp Sora collapse [2] with a NIM decline limited to ~16bp from peak.

The combination — visible capital return, structural wealth growth, and operational nimbleness — converted what started as a defensive "O-PF, S$45 target" early in the period [19][21] into a stock that broker bears capitulated on at S$58.50 by May 2026 [23][24].

---

**Sources**
[1] DBS Group Holdings Ltd., Q1 2026 Earnings Call, 29-April-2026 (TFS transcript)
[2] DBS Group Holdings Ltd., Q1 2026 Earnings Call, 29-April-2026 (TFS transcript)
[3] DBS Group Holdings Ltd., Q1 2026 Earnings Call, 29-April-2026 (TFS transcript)
[4] DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026 (TFS transcript)
[5] DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026 (TFS transcript)
[6] DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026 (TFS transcript)
[7] DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026 (TFS transcript)
[8] DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026 (TFS transcript)
[9] DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026 (TFS transcript)
[10] DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026 (TFS transcript)
[11] DBS Group Holdings Ltd., Q3 2025 Earnings Call, 5-November-2025 (TFS transcript)
[12] DBS Group Holdings Ltd., Q3 2025 Earnings Call, 5-November-2025 (TFS transcript)
[13] DBS Group Holdings Ltd., Q3 2025 Earnings Call, 5-November-2025 (TFS transcript)
[14] DBS Group Holdings Ltd., Q2 2025 Earnings Call, 6-August-2025 (TFS transcript)
[16] DBS Group Holdings Ltd., Q2 2025 Earnings Call, 6-August-2025 (TFS transcript)
[17] DBS Group Holdings Ltd., Q2 2025 Earnings Call, 6-August-2025 (TFS transcript)
[18] DBS Group Holdings Ltd., Q2 2025 Earnings Call, 6-August-2025 (TFS transcript)
[18] CLSA — "Singapore banks (On the defensive)" — 13 May 2025 — 607959041LinqAlpha.PDF
[19] CLSA — "Singapore banks (On the defensive)" — 13 May 2025 — 607959041LinqAlpha.PDF
[20] CLSA — "Singapore banks (On the defensive)" — 13 May 2025 — 607959041LinqAlpha.PDF
[21] CLSA — "Singapore banks (Stuck in neutral)" — 20 May 2025 — 607959993LinqAlpha.PDF
[22] CLSA — "Singapore banks (On the defensive)" — 13 May 2025 — 607959041LinqAlpha.PDF
[23] StreetAccount — "DBS Group Holdings upgraded to add from hold at CGS International" — 1 May 2026
[24] StreetAccount — "DBS Group Holdings upgraded to neutral from underperform at Macquarie" — 1 May 2026
[25] StreetAccount — "DBS Group Holdings reports Q1 net profit SG$2.93B vs StreetAccount SG$2.82B" — 29 April 2026
[26] StreetAccount — "DBS Group Holdings reports Q4 net income SG$2.36B vs StreetAccount SG$2.51B" — 8 February 2026
[27] DBS Group Holdings Ltd., Q2 2025 Earnings Call, 6-August-2025 (TFS transcript)
[28] CLSA — "DBS - O-PF (Wealth of returns)" — 10 June 2025 — 607961689LinqAlpha.PDF

## Citations

- [1] **DBS Group Holdings Ltd., Q1 2026 Earnings Call, 29-April-2026 11** · external
- [2] **DBS Group Holdings Ltd., Q1 2026 Earnings Call, 29-April-2026 11** · external
- [3] **DBS Group Holdings Ltd., Q1 2026 Earnings Call, 29-April-2026 11** · external
- [4] **DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026** · external
- [5] **DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026** · external
- [6] **DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026** · external
- [7] **DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026** · external
- [8] **DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026** · external
- [9] **DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026** · external
- [10] **DBS Group Holdings Ltd., Q4 2025 Earnings Call, 9-February-2026** · external
- [11] **DBS Group Holdings Ltd., Q3 2025 Earnings Call, 5-November-2025 9** · external
- [12] **DBS Group Holdings Ltd., Q3 2025 Earnings Call, 5-November-2025 9** · external
- [13] **DBS Group Holdings Ltd., Q3 2025 Earnings Call, 5-November-2025 9** · external
- [14] **DBS Group Holdings Ltd., Q2 2025 Earnings Call, 6-August-2025 10** · external
- [15] **DBS Group Holdings Ltd., Q2 2025 Earnings Call, 6-August-2025 10** · external
- [16] **DBS Group Holdings Ltd., Q2 2025 Earnings Call, 6-August-2025 10** · external
- [17] **DBS Group Holdings Ltd., Q2 2025 Earnings Call, 6-August-2025 10** · external
- [23] **DBS Group Holdings upgraded to add from hold at CGS International** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4653330&_doc_date=2026-05-01&_doc_product=SA>
- [24] **DBS Group Holdings upgraded to neutral from underperform at Macquarie** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4653297&_doc_date=2026-05-01&_doc_product=SA>
- [25] **DBS Group Holdings reports Q1 net profit SG$2.93B vs StreetAccount SG$2.82B** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4649228&_doc_date=2026-04-29&_doc_product=SA>
- [26] **DBS Group Holdings reports Q4 net income SG$2.36B vs StreetAccount SG$2.51B** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4548953&_doc_date=2026-02-08&_doc_product=SA>
- [27] **DBS Group Holdings Ltd., Q2 2025 Earnings Call, 6-August-2025 10** · external

