Singapore's DBS flags uncertain outlook as market volatility drives Q3 profit miss

SINGAPORE: Singapore's largest bank, DBS Group, warned on Thursday of growing global uncertainty due to elevated energy prices, higher interest rates and geopolitical risks as market volatility pushed its earnings lower.

DBS, which is also Southeast Asia's biggest lender by assets, said July-September net profit fell five per cent to S$2.81 billion (US$2.20 billion) from a year earlier, mainly on a decline in markets trading income.

The result undershot the mean estimate of S$2.90 billion from four analysts, according to LSEG data, even though its wealth management division posted a strong performance.

The group's markets trading income sank 65 per cent year-on-year to S$152 million for the quarter, which DBS attributed to "unfavourable equity market conditions".

The bank's net interest margin, a key profitability ‌gauge, fell 9 basis points year-on-year to 1.87 per cent.

The decline underscores how surging global bond yields, a rout in high-flying technology stocks last quarter and the ongoing Middle East conflict are beginning to bite into Singapore lenders' earnings after strong wealth management momentum cushioned their bottom lines in the first half.

DBS's result was announced a day after its smaller peer UOB posted a fall in its trading and investment income and flagged further margin pressures ahead.

"While the global economy has remained resilient, the outlook has become more uncertain," DBS CEO Tan Su Shan said in a statement. "As we enter 2027, we will stay nimble to capture opportunities while prudently managing risks."

Asia's ongoing wealth boom continued to bolster the earnings of Singapore's largest lender.

For the quarter, wealth management fees rose nine per cent from a high base a year ago to S$864 million, supported by growth in assets under management.

Transaction services fees recorded a new high, while loan-related and card fees similarly increased, taking its net fee income up an annual six per cent to S$1.43 billion.

For its 2027 outlook, DBS said it expects total income to rise in the mid-single-digit range, assuming two more US Federal Reserve rate hikes by the end of next year, alongside a gradual rise in domestic interest rates and the Singapore dollar.

The "structural growth" in wealth management is also expected to continue, the bank said.

Separately, DBS announced on Thursday that it has appointed board member Anthony Lim as chairman from Jan 1, 2027, succeeding Peter Seah, who will step down after 16 years in the role.