OCBC Investment Research
7 August 2025

DBS Group Holdings Surges Ahead: Robust Q2 Earnings, Wealth Management Momentum, and Raised Fair Value Target

DBS Group Holdings: A Strong Q2 Sets the Stage for Further Upside

Singapore’s leading financial institution, DBS Group Holdings Ltd, has delivered a stellar performance in the second quarter of 2025, surprising markets and investors with resilient earnings and record-breaking growth in wealth management. With the latest fair value upgrade to SGD54.00 and a “BUY” rating, DBS continues to solidify its position as a regional banking powerhouse, even amidst global macroeconomic challenges.

Key Highlights from Q2 2025 Results

• Record Wealth Management Income: DBS achieved a new high in assets under management (AUM), reaching SGD442 billion. Wealth management income for 2Q25 stood at SGD649 million—its second-best quarter ever after a record SGD724 million in 1Q25. This segment accounted for 47% of fee income, highlighting the bank’s continued traction in high-value financial services.
• Net New Money Inflows: Management reported net new money at SGD9 billion, well above the usual SGD5–6 billion range (excluding Treasures flows), indicating strong client engagement and confidence.
• Net Interest Income Guidance: DBS is guiding for group net interest income to surpass 2024 levels, supported by proactive hedging and robust deposit growth, even as SORA and HIBOR declined.
• Disciplined Cost Management: The bank expects to maintain its cost-to-income ratio below 40%, reflecting ongoing operational discipline.
• Provisioning Outlook: Specific provisions are expected to normalize to 17–20 basis points in the second half of 2025, signaling prudent risk management.
• Digital Asset Initiatives: DBS is positioning itself as a key banking partner for regulated stablecoin issuers, with its digital asset business growing from SGD30 million last year and set to become a more meaningful revenue stream.

Financial Performance and Key Metrics

• Net Interest Margin: Slight decrease from 2.12% in Q1 to 2.05% in Q2; FY24 at 2.1%, forecasted at 2.0% for FY25/26.
• Return on Equity (ROE): 17.0% in Q2, compared with 17.4% in Q1; FY24 at 18.0%.
• Dividend Yield: Estimated at 6.1% for FY25/26, up from 4.5% in FY24.

Operational and Segmental Insights

• Q2 net earnings were SGD2.82 billion, exceeding market expectations.
• Net interest income for the quarter was SGD3.65 billion (down 2% QoQ, 1% YoY), while card fees rose to SGD302 million.
• Allowances decreased significantly from SGD325 million in Q1 to SGD133 million in Q2.
• The non-performing loan (NPL) ratio remained steady at 1.0%.
• Wealth management income for 1H25 totaled SGD2.84 billion, marking strong YoY growth from SGD2.62 billion in 1H24.
• Non-interest income now comprises 56% of total income, versus 48% in 4Q24.

Strategic Outlook and Dividend Policy

• DBS is optimistic about continued deposit and fee income growth, with mid- to high-single-digit growth in commercial book non-interest income, and double-digit growth in wealth management.
• Cost discipline will keep cost-to-income ratio under 40%.
• Net profits in FY25 expected to be slightly below FY24 due to the global minimum tax of 15%.
• The base dividend will be SGD3.00 per share, complemented by a share buy-back program—providing strong price support.
• DBS stock has appreciated 10.4% since May 2025, underscoring investor confidence.

ESG Performance and Corporate Governance

• DBS leads most global peers in corporate governance, particularly in board structure.
• Robust talent management programs in place, though staff turnover (12% FY19–21 average) exceeds the industry average of 9.3%.
• ESG rating breakdown: Social pillar (54%), Governance (33%), Environment (13%).
• DBS scores above industry average in Environment and Governance, but below in Social due to concerns over human capital development, access to finance, and privacy/data security.

Potential Catalysts and Investment Risks

• Further growth and differentiation in digital banking.
• Upside from fee income, wealth management, and credit card spend.
• Risks include slower loan and earnings growth in key markets, margin pressure, increased competition, and asset quality deterioration.

Regional Peer Comparison: How DBS Stacks Up

DBS Group: Company Overview and Expansion Strategy

Headquartered in Singapore, DBS operates across 18 markets with strategic axes in Greater China, Southeast Asia, and South Asia. Its digital strategy gives it an edge in cash management, securing mandates from multinational corporations and SMEs. The bank has expanded its footprint in China and India, acquiring Lakshmi Vilas Bank and a stake in Shenzhen Rural Commercial Bank, and recently completing the acquisition of Citigroup’s Taiwan consumer banking business.

Breakdown of Fees and Loans (FY24)

• Fees & Commissions: Wealth Management (43%), Cards (24%), Transaction Services (18%), Loan-related (13%), Investment Banking (2%).
• Loans by Segment: Building & Construction (26%), Housing Loans (20%), Manufacturing (10%), General Commerce (10%), Transport/Storage/Communications (8%), Non-bank Financials (9%), Professionals/Private Individuals (10%), Others (8%).

Five-Year Financial Performance Snapshot

Detailed Financials and Credit Ratios

Conclusion: DBS Positioned for Resilience and Growth

DBS Group Holdings continues to demonstrate financial strength, strategic foresight, and operational excellence. Despite global uncertainties, its record wealth management performance, disciplined cost control, and innovative digital strategies position it to ride out near- to medium-term market fluctuations. With a raised fair value target and robust dividend policy, DBS stands out as a compelling investment opportunity in the Asian banking sector.