DBS Adjusts 2025 Guidance After Q1 Profits Exceed Expectations

By Yantoultra Ngui

SINGAPORE (CryptoTrendLens.blogspot.com) – DBS Group, Singapore’s largest bank, highlighted risks due to increased uncertainty and adjusted its 2025 forecasts following a 2% decline in first-quarter net profits announced on Thursday, which still surpassed estimates.

DBS shares climbed 1.5% during early trading, surpassing the benchmark index’s decline of 0.3%.

In a research update sent to their clientele, Jefferies highlighted that the earnings surprise "underscores the robustness of DBS's position" within Singapore's banking sector, and they continue to favor DBS over other local financial institutions.

Heightened trade tensions have increased both macroeconomic risks and market volatility," stated DBS CEO Tan Su Shan. "Given the ongoing uncertainties, we aim to remain adaptable to seize potential chances while carefully mitigating risks.

DBS largely upheld its 2025 projections; however, it currently anticipates three interest-rate reductions instead of two for the latter part of this year, as noted by Tan in his commentary following the release of the results.

She mentioned that investments would shift towards non-loan assets should loan requests decrease, and forecasted moderate expansion in commercial banking non-interest income to fall between mid-and high-single digits, compared to the higher single-digit projection made in February.

Tan further mentioned that general provisions should act as a cushion rather than allowing for possible writebacks as was initially anticipated.

DBS's outcomes were similar to those of its smaller counterpart, United Overseas Bank, which reported on Wednesday a steady but below-par first-quarter net profit. The bank also decided to halt providing guidance for 2025 as a result of the uncertainties caused by U.S. tariffs.

Major international banks like HSBC and Standard Chartered have similarly pointed out the risk to economic expansion because of the effects from U.S. President Donald Trump's tariffs.

DBS, the largest bank in Southeast Asia based on asset size, reported that its net income for January to March fell to S$2.9 billion ($2.24 billion) compared to S$2.95 billion during the same period last year, primarily because of increased tax costs resulting from the adoption of a 15% worldwide minimum tax rate. This marked the first yearly decrease since the opening quarter of 2022.

However, the outcome surpassed the average forecast of S$2.82 billion from two analysts, as per LSEG data.

The profit before tax reached a peak of S$3.44 billion in the initial quarter, marginally exceeding the previous year's figure, driven by a strong surge in total income due to substantial business expansion, as stated in the bank’s fiscal report.

DBS mentioned that they set aside a general allowance of S$205 million as a cautious step to bolster their general provisions reserve to $4.16 billion due to recent events that have increased macroeconomic and geopolitical uncertainties.

The company declared a regular dividend of 60 Singapore cents per share along with a capital return dividend of 15 cents for the initial quarter.

In the first quarter, DBS's return on equity stood at 17.3%, which is a decline from 19.4% recorded in the previous year.

The net interest margin, which serves as an important indicator of profit potential, decreased slightly to 2.12% in the initial quarter from 2.14% during the corresponding term the previous year.

The Oversea-Chinese Banking Corporation plans to release its results on Friday.

($1 = 1.2940 Singapore dollars)

(Reported by Yantoultra Ngui; Edited by Chris Reese and Stephen Coates)