DBS Group achieved record profit before tax of SGD 3.44 billion ($2.6 billion) in the first quarter of 2025, slightly higher than a year ago, as total income reached a new high from robust business growth.

General allowances of SGD 205 million ($158 million) were taken as a prudent measure to strengthen GP reserves in light of recent developments that have added to macroeconomic and geopolitical uncertainty. Net profit was 2% lower at SGD 2.90 billion ($2.2 billion) due to higher tax expenses from the implementation of the 15% global minimum tax.

Total income rose 6% to SGD 5.91 billion ($4.5 billion) from balance sheet growth, record fee income and treasury customer sales driven by wealth management, as well as the strongest markets trading income in 12 quarters. The cost-to-income ratio (CIR) was stable at 37%. Asset quality was resilient with the non-performing loan (NPL) ratio at 1.1% and specific allowances at 10 basis points of loans.

Compared to the previous quarter, net profit was 10% higher. Group net interest income rose 1% on a day-adjusted basis from balance sheet growth, while non-interest income grew 25% driven by higher fees, treasury customer sales and markets trading. Expenses fell 8% partly due to non-recurring items in the previous quarter while specific allowances halved.

The board declared an ordinary dividend of SGD 60 cents per ($0.46) share and a capital return dividend of SGD 15 cents ($0.12) per share for the first quarter.

Quarter-on-quarter performance

Commercial book net interest income declined 1% on a day-adjusted basis to SGD 3.72 billion ($2.87 billion) as a nine-basis-point decline in net interest margin to 2.68% from lower interest rates was mitigated by balance sheet growth.

Loans rose 2% or SGD 7 billion ($5 billion) in constant-currency terms to SGD 435 billion ($336 billion). Non-trade corporate loans increased 3% or SGD 8 billion ($6.18 billion) from broad-based growth across the region and a range of industries. Trade loans fell 1% or SGD 1 billion ($772 million) while housing and other consumer loans were stable.

Deposits rose 3% or SGD 18 billion ($13.9 billion) to SGD 576 billion ($445 billion) led by a 5% or SGD 13 billion ($10 billion) increase in CASA. The CASA ratio improved to 53%.

Commercial book net fee income rose 32% to a record SGD 1.28 billion ($988 million) led by wealth management and loan-related fees. Wealth management fees increased 39% to a new high of SGD 724 million ($559 million) driven by higher sales of investment products and bancassurance from a constructive market environment and seasonal factors. Loan-related fees rose 79% to a record SGD 227 million ($175 million) with increased deal activity.

Commercial book other non-interest income of SGD 548 million ($423 million) was stable compared to the previous quarter, which included property disposal gains. Treasury customer sales rose 32% to a new high.

Markets trading income more than doubled to SGD 363 million ($280 million) as interest rate, foreign exhange (FX) and equity derivative activities benefited from market volatility and as funding costs fell.

Expenses of SGD 2.21 billion ($1.7 billion) were 8% lower partly due to non-recurring items in the previous quarter. Profit before allowances rose 19% to SGD 3.69 billion ($2.8 billion) .

Commercial book net interest income rose 2% as a nine-basis-point decline in net interest margin was more than offset by balance sheet growth. Loans grew 3% in constant-currency terms led by non-trade corporate loans, while deposits were 6% higher.

Net fee income increased 22% as wealth management fees grew 35% from strong market sentiment and higher assets under management, while loan-related fees rose 23% with increased activity.

Commercial book other non-interest income was 12% lower. The decline was driven by non-recurring items, while treasury customer sales grew 11% to a record.

Markets trading income increased 48%, partly reflecting lower funding costs.

Expenses rose 6% from higher staff costs. The CIR was stable at 37%. Profit before allowances increased 6%.

Asset quality remained resilient. Non-performing assets fell 3% from the previous quarter to SGD 4.86 billion ($3.7 billion) as new non-performing asset formation was lower than in recent quarters while upgrades were higher. The NPL ratio was stable at 1.1%. Specific allowances were SGD 120 million ($92 million) or 10 basis points of loans. Given the recent escalation in macroeconomic and geopolitical uncertainty, general allowances of SGD 205 million ($158 million) were prudently taken to strengthen GP reserves to SGD 4.16 billion ($3.5 billion). Allowance coverage stood at 137% and at 230% after considering collateral.

Liquidity remained healthy. The liquidity coverage ratio of 145% and net stable funding ratio of 115% were both well above regulatory requirements.

The reported common equity tier-1 ratio was 17.4% based on transitional arrangements, while the pro-forma ratio on a fully phased-in basis was 15.2%. The leverage ratio of 6.5% was more than twice the regulatory minimum of 3%.

DBS CEO Tan Su Shan said, “We had a strong start to the year with broad-based business growth led by wealth management, and return on equity (ROE) above 17% despite the impact of the global minimum tax. 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. We have strengthened our general allowance reserves, and together with our strong capital and liquidity positions, we have a solid foundation to continue supporting customers.”

Re-disseminated by The Asian Banker