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DBS’ 2Q25 earnings of S$2.8bn were in line with our estimates, with 1H25 earnings at 50% of our FY25e forecast. 2Q25 DPS raised 39% YoY to 75 cents (comprising 60 cents ordinary dividend and 15 cents capital return dividend).
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NII rose 2% YoY from loan and deposit growth while NIM fell 9bps YoY to 2.05%. WM fees, treasury customer sales, and trading income led non-interest income growth of 11%. DBS has maintained FY25e guidance for NII at 2024 levels, non-interest income growth of mid to high single-digit, and PATMI below 2024 levels due to higher taxes.
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Maintain ACCUMULATE with a higher target price of S$52.00 (prev. S$46.90) as we lower the beta to 1.1 (prev. 1.2) to reflect DBS’ more defensive earnings profile, strong capital position, and relatively lower sensitivity to market volatility compared to its peers. Our FY25e estimates remain unchanged. We assume a 2.09x FY25e P/BV and a 17.5% ROE estimate in our GGM valuation. We expect non-interest income to be the main growth driver, as heightened volatility will benefit trading income and continued WM growth from the shift in investor sentiment and AUM inflows. NII supported by huge deposit growth. However, higher provisions and the global minimum tax would hurt PATMI in FY25. We prefer DBS among the Singapore banks given its fixed dividend per share policy. DBS extended ordinary dividend guidance of additional 24 cents in FY26e.
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