DBS banks on deposit growth to keep income stable in 2026 as interest rates fall

[SINGAPORE] DBS expects its total income for 2026 to be around 2025 levels, as lower interest rates ahead can likely be mitigated by a growth in deposits, said chief executive Tan Su Shan.

Group net interest income (NII) will likely be weighed down by rate cuts in the US, a stronger Singapore dollar and based on the current Singapore Overnight Rate Average levels.

But the bank will make up for it with volume growth and fee growth, said Tan at a briefing for the lender’s third-quarter results on Thursday (Nov 6).

She sees opportunities within the equities capital markets and debt capital markets, as corporates come back to these segments amid lower rates.

The bank should also continue to see growth in loan fees as it focuses on winning market share, wallet share and mind share.

Meanwhile, Tan noted “a lot of momentum” in potential trade flows, as customers diversify their supply chains and look for new markets.

DBS is looking at growing the pipeline for intra-regional trade between Asian countries, which include Asean nations and China, she added.

The lender also expects to post high single-digit growth in commercial book non-interest income for 2026 amid tailwinds in its cost of funds, while gains in wealth management should be in the mid-teens.

Tan noted that the bank has refreshed its digital wealth strategy, which is now “yielding fruit” as momentum travels to DBS’ retail and retail wealth segments.

Q3 results

In the third quarter of 2025, DBS’ net profit fell 2 per cent on the year to S$2.95 billion, which beat the S$2.79 billion consensus forecast in a Bloomberg survey of six analysts.

This comes as total income reached a new high of S$5.93 billion, although net profit was lower due to the impact of the global minimum tax.

“Both the structural and cyclical growth came into gear in Q3 because the capital markets were very strong, so we saw strong momentum,” said Tan.

“The fact that we had some nimble hedging and we were able to capture some opportunities when the market became volatile speak to our resiliency… and what was also pleasing was the fact that we saw huge amounts of deposits coming back to us.”

Group NII was little changed at S$3.58 billion, as strong deposit growth and proactive balance-sheet hedging mitigated the impact of lower rates.

Customer deposits rose 9 per cent on the year on a constant-currency basis to S$596.07 billion, led by current and savings account inflows.

Meanwhile, total customer loans were up 4 per cent at S$437.03 billion.

As a result, surplus deposits were deployed into high-quality liquid assets, which was accretive to NII and return on equity, though it modestly reduced net interest margin (NIM).

But, for the commercial book segment, NII fell 6 per cent to S$3.56 billion, as its NIM declined 43 basis points to 2.4 per cent.

Overall, group NIM stood at 1.96 per cent for the quarter, from 2.11 per cent in the corresponding period last year.

DBS also saw record fee income and treasury customer sales in Q3.

These two segments, which the bank calls its “customer-driven non-interest income”, is up 22 per cent on the year at S$1.94 billion.

“Fee income and treasury customer sales fall under different lines of the financial statement due to accounting treatment, (but) should be viewed equally as they are both driven by consumer and corporate customers’ demand for financial products,” said DBS chief financial officer Chng Sok Hui.

Commercial book net fee and commission income was up 22 per cent at S$1.36 billion, with the increase broad-based and led by wealth management fees.

Commercial book other non-interest income rose 12 per cent to S$578 million, as treasury customers sales to wealth management and corporate customers grew 21 per cent to a new high.

Meanwhile, markets trading income rose 33 per cent to S$439 million due mainly to higher equity derivative activity.

The lender declared an ordinary dividend of S$0.60 per share and a capital return dividend of S$0.15 per share for the period.

This brings the quarter’s total dividend payout to S$0.75 per share, compared with the S$0.54 per share in the year-ago period.

The bank’s non-performing loans ratio was flat at 1 per cent.

Shares of DBS were up 3.4 per cent at S$55.29 as at the midday break on Thursday.