By Rae Wee and Yantoultra Ngui
SINGAPORE, Feb 9 (Reuters) - Singapore's biggest bank DBS Group on Monday maintained its expectation that net profit this year will dip slightly from 2025, after posting a 10% drop in fourth-quarter earnings that was weighed down by a lower net interest margin.
DBS, which is also Southeast Asia's largest bank by assets, said October-December net profit dropped to S$2.26 billion ($1.78 billion) from S$2.52 billion a year earlier.
That missed the mean estimate of nearly S$2.55 billion from two analysts, according to LSEG data.
"The key driver for the underperformance in 4Q25 was weaker-than-expected markets trading income," CGS International analysts Tay Wee Kuang and Lim Siew Khee wrote in a note on Monday.
Shares of DBS last traded 1.1% lower at S$58.63, having fallen nearly 2% earlier in the session. The domestic benchmark index was up 0.6%.
For the period, overall group net interest margin, a key profitability gauge, stood at 1.93% as compared to 2.15% the previous year, with net interest income impacted by lower domestic rates. Return on equity declined to 13.5% from 15.8% a year ago.
The lender's wealth segment's assets under management meanwhile grew 19% in constant-currency terms to a new high of S$488 billion in the fourth quarter.
At the bank's results briefing on Monday, CEO Tan Su Shan said that despite a "perfect storm" last year in terms of rates and a strong Singapore dollar, she was pleased that DBS delivered record pre-tax profit and deposit growth in 2025, among other things.
For the year ahead, the bank is forecasting net profit to come in "slightly below 2025 levels".
"I tell all our clients 'buckle up, it's going to be a volatile year'... I hope that DBS will continue to be a beneficiary of these global volatile winds," said Tan.
According to the bank's financial statement, provisions for bad loans jumped 81% to S$415 million in the fourth quarter, mainly due to real estate exposure, while DBS wrote back S$206 million in general allowances, including amounts previously set aside for that exposure.
The bank declared an ordinary dividend of S$0.66 per share and a capital return dividend of S$0.15 per share for the fourth quarter.
DBS added that it plans to continue the capital return dividends for financial years 2026 and 2027, barring unforeseen circumstances.
CGS International reiterated its "hold" call on DBS, saying the dividend outlook helps support the stock.
DBS is the first Singapore lender to start this earnings season. Smaller peers United Overseas Bank and Oversea-Chinese Banking Corp are due to announce their results on February 24 and 25, respectively.
($1 = 1.2707 Singapore dollars)
(Reporting by Rae Wee and Yantoultra Ngui; Editing by Cynthia Osterman, Mark Porter, Stephen Coates and Lincoln Feast.)
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