They say the impact of US tariffs will likely be felt only in the second half of 2025

 

[SINGAPORE] Analysts raised price targets for shares of DBS, following its first quarter results release on Thursday (May 8).

 

The bank&rsquo s net profit at S$2.9 billion for the three months ended Mar 31 - 2 per cent lower than the S$2.95 billion from the same year-ago period. However, it beat the S$2.87 billion consensus forecast in a Bloomberg survey of eight analysts.

 

An interim dividend per share (DPS) of S$0.60 and a capital return DPS of S$0.15 were also declared, reflecting a total dividend of S$0.75 per share for Q1.

 

RHB also kept their &ldquo buy&rdquo rating on the local bank with an unchanged target price of S$47. Its research team noted how its Q1 results were &ldquo in line with expectations&rdquo , at 26 to 27 per cent of their and consensus FY2025 profit after tax and minority interest (Patmi).

 

Its research team also noted that DBS reaffirmed its S$8 billion capital returns commitment, which comprises S$3 billion in share buybacks &ndash of which 9 per cent has been executed so far &ndash and S$5 billion in dividends over a three-year period.

 

Maybank analysts kept their &ldquo hold&rdquo rating on DBS, with a higher target price of S$45.26, up from S$38.48.

 

&ldquo DBS&rsquo commitment to capital returns and its &lsquo safe haven&rsquo status provides a cushion for downside balance sheet risks,&rdquo they wrote in their May 8 report.

 

While net interest margins (NIMs) fell, Maybank analysts observed that net interest income (NII) held up as excess liquidity was deployed to high quality, low yield instruments and loan substitutes.

 

However, the potential for sizable earnings upgrades amid poor macro visibility is also limited, Maybank indicated.

 

&ldquo Extreme US policy and geopolitical uncertainty across multiple theatres makes us cautious on unknown-unknowns,&rdquo they explained. &ldquo In past cycles, such as Covid-19 and the operations and maintenance crisis (in the oil and gas industry), despite strong provisions, negative impacts progressed quickly.&rdquo

 

That said, RHB&rsquo s research team acknowledges how DBS set aside S$205 million in general provisions to build provision buffers on macroeconomic and geopolitical uncertainties, too.

 

Both Citi and RHB&rsquo s team did note that DBS is &ldquo not too concerned&rdquo about the first order impact from US tariffs as exposure to vulnerable sectors is only one to two per cent of loans in the auto, consumer discretionary and mining areas to large corporations.

 

&ldquo It is still assessing the impact from the second order but highlighted that exposure to small-medium enterprises and unsecured consumer financing which make up 3 per cent of loans, each. This is not too significant, and it has already been more cautious on these segments in recent years,&rdquo wrote the RHB analysts.

 

To most of the analysts, DBS&rsquo business momentum has been resilient in April and any adverse impact from tariff policy negotiation outcomes are only likely to be felt in the second half of 2025, which include impact on loans growth, and wealth management and loans-related fees.

The bank has other assets to deploy into if loan demand declines in H2 amid persistent trade war

 

[SINGAPORE] DBS : D05 +0.77% expects its loan demand will remain strong in the first half of 2025, but warned that it may slow in the second half if the trade war persists, said chief executive Tan Su Shan.

 

The lender is projecting its full-year loan growth to be around 5 to 6 per cent, depending on how loan demand fares in the second half of 2025.

 

Nevertheless, Tan expects DBS has other assets &ndash which will be interest-bearing and have good return on equity (ROE) &ndash that it can deploy its deposits into, even if loan demand falls, she said at the lender&rsquo s first-quarter 2025 results briefing on Thursday (May 8).

 

Quarter on quarter, loans were up 2 per cent in constant-currency terms to S$442 billion as at March 2025, led by non-trade corporate loans.

 

&ldquo It was a solid, good quality, large corporate, deal-driven loan book, and that&rsquo s the kind of loans we want to grow. It&rsquo s franchise driving, it&rsquo s good ROE, and it deepens relationships long term,&rdquo Tan said.

 

Deposit growth in the quarter was strong, said Tan, with the momentum set to continue. Q1 deposits were up 3 per cent at S$576 billion as at March 2025, led by current and savings account (Casa) inflows.

 

Casa growth will also mitigate the decline in interest rates. The lender kept its guidance for 2025&rsquo s group net interest income to be slightly above 2024 levels, even after raising rate-cut expectations to three cuts this year in line with market expectations.

 

The lender took general allowances of S$205 million in Q1 to strengthen its reserves amid macroeconomic and geopolitical uncertainty.

 

&ldquo Given that we closed our books after &lsquo Liberation Day&rsquo , we should exercise some prudence. And given the good first quarter, we thought it was a wise thing to do,&rdquo said Tan, who noted that business momentum remained resilient in April.

 

While Tan noted a pause in some longer-term investments as corporates await more clarity, she sees limited impact to &ldquo first-order risks&rdquo &ndash which are direct risks on sectors and countries &ndash given that its exposure to US-China flows is muted.

 

In fact, DBS will likely benefit from shifts in trade and supply chains, as intra-regional trade within Asia and with the Middle East and Europe picks up.

 

&ldquo The good news is that trade outside the US still remains pretty robust, and you work towards that shift in focus from just selling to the US or the West to looking at trade flows outside the US.&rdquo

 

The lender is looking at new supply chain and sea logistics links, and could potentially see more demand for inventory financing, alternative currencies and liquidity solutions.

 

Instead, the lender continues to stress test for &ldquo second-order risks&rdquo arising from a macroeconomic slowdown and fall in consumer confidence.

 

Meanwhile, India&rsquo s structural growth story remains positive, despite geopolitical concerns and the tariff war, with &ldquo good trade flows&rdquo from North-east Asia and western multinational corporations into India.

 

Q1 results beat

Q1 net profit fell 2 per cent on the year to S$2.9 billion due to higher tax expenses from the implementation of the 15 per cent global minimum tax, beating the S$2.87 billion consensus forecast in a Bloomberg survey of eight analysts.

 

The lender declared a total dividend of S$0.75 a share for Q1, comprising an ordinary dividend of S$0.60 and a capital return dividend of S$0.15, up from S$0.54 a share in the year-ago period.

 

For the commercial book, total income was up 4 per cent on the year at S$5.54 billion.

 

Net interest income for the segment rose 2 per cent to S$3.72 billion, as a nine-basis-point decline in net interest margin (NIM) to 2.68 per cent was more than offset by balance sheet growth.

 

Commercial book net fee and commission income was up 22 per cent at S$1.28 billion, as wealth management fees grew from strong market sentiment and higher assets under management, while loan-related fees rose with increased activity.

 

Treasury customer sales and other income for the segment fell 12 per cent to S$548 million, due to non-recurring items, while treasury customer sales grew 11 per cent to a record.

 

Meanwhile, its markets trading income rose 48 per cent to S$363 million, partly reflecting lower funding costs.

 

Overall, group NIM fell to 2.12 per cent for the quarter, from 2.14 per cent in the previous corresponding period.

 

The bank&rsquo s non-performing loans ratio was flat at 1.1 per cent.

 

&ldquo (Q1) was a solid quarter &ndash we were firing on all cylinders,&rdquo Tan said. &ldquo Our structural growth remains... the cyclicality and the volatility that comes with a slowdown and tariff uncertainty, we can deal with.&rdquo

It bucks the trend among the Singapore banks

 

[SINGAPORE] DBS shares rose 2.1 per cent or S$0.88 on Thursday (May 8) to reach S$43.64 as at 11.26 am.

 

This compared with shares of UOB, which inched up 0.03 per cent or S$0.01 to S$34.50 and OCBC, which dipped 0.1 per cent or S$0.01 to S$16.26.

 

Past midday at 1.13 pm, DBS was up 1.1 per cent or S$0.48 at S$43.24. On the other hand, OCBC was trading 0.8 per cent or S$0.13 lower at S$16.14, and UOB fell 0.3 per cent or S$0.11 to S$34.38.

 

Earlier this morning, DBS announced that its net profit for its first quarter fell 2 per cent to S$2.9 billion and declared a quarterly dividend of S$0.75 a share.

 

The bank&rsquo s net profit figure was 2 per cent lower than the S$2.95 billion from the year-ago period.

 

Its earnings beat the S$2.87 billion consensus forecast in a Bloomberg survey of eight analysts.

 

At 9.03 am, DBS&rsquo share price was S$43.48, before declining to S$43.285 at 9.40 am. It later traded at S$42.94, before rising 1.9 per cent or S$0.79 to reach S$43.55 as at 11.18 am.

 

UOB on Wednesday reported a net profit of S$1.49 billion for the three months ended March. This was unchanged from the year-ago period, when the earnings missed the S$1.54 billion consensus forecast in a Bloomberg survey of five analysts.

 

OCBC&rsquo s Q1 results are scheduled to be released on Friday.

 

In a May 8 report, Tan Yong Hong, vice-president of equity research at Citi, had a &ldquo buy&rdquo rating on DBS, with a raised target price of S$47.

 

He noted that the group&rsquo s asset quality is robust with non-performing assets (NPA) formation at just 14 basis points, though DBS likely built general allowances given its record topline. 

 

&ldquo NPA coverage is at 137 per cent which was 8 percentage points higher quarter on quarter and 12 per cent higher year on year,&rdquo wrote Tan.

 

However, he did acknowledge &ldquo uncertainties on loans growth&rdquo , which was earlier guided at mid-single-digits.

 

DBS&rsquo non-performing loans ratio was flat at 1.1 per cent, and the group&rsquo s overall net interest margin (NIM) fell to 2.12 per cent for the quarter, from 2.14 per cent in the previous corresponding period. For the commercial book of the bank, its NIM declined by nine basis points to 2.68 per cent.

 

[SINGAPORE] DBS&rsquo net profit for its first quarter fell due to higher tax expenses from the implementation of the 15 per cent global minimum tax, it said on Thursday (May 8).

 

Net profit for the three months ended March 31, 2025 stood at S$2.9 billion, compared with S$2.95 billion from the year-ago period.

 

The earnings missed the S$2.87 billion consensus forecast in a Bloomberg survey of eight analysts.

 

The lender declared a total dividend of S$0.75 per share for Q1, comprising S$0.60 ordinary dividend and a S$0.15 capital return dividend, up from S$0.54 in the year-ago period.

 

For the commercial book, total income was up 4 per cent on year to S$5.54 billion.

 

Net interest income for the segment rose 2 per cent to S$3.72 billion, as nine-basis-point decline in net interest margin (NIM) to 2.68 per cent was more than offset by balance sheet growth.

 

Net fee and commission income was up 22 per cent to S$1.28 billion, as wealth management fees grew from strong market sentiment and higher assets under management, while loan-related fees rose with increased activity.

 

Its treasury customer sales and other income fell 12 per cent to S$548 million, due to non-recurring items, while treasury customer sales grew 11 per cent to a record.

 

Meanwhile, its markets trading income rose 48 per cent to S$363 million, partly reflecting lower funding costs.

 

Overall, group NIM fell to 2.12 per cent for the quarter, from 2.14 per cent in the previous corresponding period.

 

The bank&rsquo s non-performing loans (NPL) ratio was flat at 1.1 per cent.

 

The bank said it made additional general allowances of S$205 million to strengthen reserves in light of recent developments that have added to macroeconomic and geopolitical uncertainty.

 

Tan Su Shan, chief executive of DBS, said: &ldquo Recent escalations in trade tensions have heightened macroeconomic risks and market volatility. As uncertainty persists, we will stay nimble to capture opportunities while prudently managing risks.&rdquo