DBS Group Holdings Ltd – Wealth flows and fees drive growth May 4, 2026 42

PSR Recommendation: ACCUMULATE Status: Maintained
Last Close Price: 58.5 Target Price: 61.00
  • DBS’ 1Q26 earnings of S$2.9bn were within our estimates, at 26% of our FY26e forecast. 1Q26 DPS increased 8% YoY to 81 cents (comprising 66 cents ordinary dividend and 15 cents capital return dividend); we estimate total FY26e DPS of S$3.30 (+8% YoY).
  • NII fell 5% YoY as NIM compressed 23bps YoY to 1.89% but only 4bps QoQ (flat day-adjusted) as deposit growth and hedging offset lower rates. Fee income rose 16% YoY on record WM fees of S$907mn (+25% YoY), and SP normalised to 14bps (vs 36bps in 4Q25). Management subtly upgraded FY26 guidance, with total income now expected around 2025 levels (vs prior implied PATMI decline), despite assuming no further US rate cuts and a lower SORA assumption of 1%.
  • Maintain ACCUMULATE with a higher target price of S$61.00 (prev. S$60.00) as we nudge up our FY26e earnings by 1% from higher wealth management estimates. We assume a 2.51x FY26e P/BV and a 16.6% ROE estimate in our GGM valuation. We expect non-interest income to remain the primary growth driver, with bancassurance providing counter-cyclical diversification to investment-linked WM fees, while improving HK CRE conditions offer optionality on GP writebacks. We continue to prefer DBS among the Singapore banks given its capital return plans (until FY27), fixed DPS policy, and high dividend payout ratio (dividend yield FY26e: 5.6%, FY27e: 6.1%), which offer greater stability compared to its peers, which follow a floating payout ratio tied to earnings performance.

 

 

 

 

 

 

 

 

 

The Positives
+ Record non-II; structural diversification through bancassurance. Commercial book net fee
income rose 16% YoY to a record S$1.48bn, led by wealth management fees of S$907mn
(+25% YoY) on higher investment product sales and bancassurance. Wealth segment AUM
reached a record S$492bn (+17% YoY) with net new money of S$10bn (S$6bn HNW, S$4bn
Treasures), broad-based geographically. Transaction services fees of S$257mn and treasury
customer sales of S$592mn were also at record highs. Importantly, bancassurance (~20% of
wealth fees) is counter-cyclical to investment-linked fees and provides structural
diversification. April investment momentum was muted in the first two weeks but
rebounded in week three, while bancassurance momentum has been “exceptionally strong”.
Cash equities also scaled (+77% YoY) as institutional equities grew 36% YoY, signalling a new
growth lever beyond the wealth franchise.

+ Allowances normalise, asset quality strengthening. Total allowances of S$190mn fell 42%
YoY, driven by an 84% YoY decline in GP charges to S$33mn as macro-overlay needs
moderated. SP of S$157mn was 31% higher YoY but at 14bps remained within the 17-20bps
guided range, with the 4Q25 HK real estate downgrade now confirmed as idiosyncratic. NPL
ratio improved to 1.0% (1Q25: 1.1%) on low new NPA formation, more than offset by
repayments and write-offs. Allowance coverage stood at 131% (200% with collateral), with
the GP overlay at ~S$2.4bn providing a substantial buffer against Iran-related second-order
risks and offering meaningful writeback optionality should HK CRE conditions continue to
improve.

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About the author

Profile photo of Glenn Thum

Glenn Thum
Research Analyst
PSR

Glenn covers the Banking and Finance sector. He has had 3 years of experience as a Credit Analyst in a Bank, where he prepared credit proposals by conducting consistent critical analysis on the business, market, country and financial information. Glenn graduated with a Bachelor of Business Management from the University of Queensland with a double major in International Business and Human Resources.

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