DBS raises 2026 guidance as wealth business powers growth in Q2 despite lower rates

[SINGAPORE] DBS has raised its full-year guidance after record earnings in the first half, betting that strong momentum in wealth management and other fee-generating businesses will help offset pressure from lower interest rates.

CEO Tan Su Shan said the bank’s performance reflected broad-based strength across its businesses.

Speaking at DBS’ earnings briefing on Thursday (Aug 6), Tan said that the team is “firing on all cylinders and building a strong foundation for future growth”.

The lender now expects total income for 2026 to exceed 2025 levels, while group net interest income should narrow the gap with last year’s performance as rates stabilise.

It also raised its commercial book non-interest income growth forecast to the mid-teens, led by wealth management, while maintaining cost discipline and its guidance for specific allowances.

The improved outlook comes even as Singapore dollar interest rates have almost halved from the year before.

Tan said DBS expects no further US rate hikes this year and forecasts the benchmark Singapore Overnight Rate Average to average about 1.2 per cent for the rest of 2026.

“We think we can narrow the gap for the full year as rates bottom out,” she said.

For the second quarter ended Jun 30, net profit rose 9 per cent to a record S$3.08 billion, beating the S$2.88 billion consensus forecast in a Bloomberg survey of five analysts.

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Total income climbed 6 per cent to a record S$6.09 billion, crossing the S$6 billion mark for the first time.

Although group net interest income fell 2 per cent to S$3.58 billion as lower interest rates compressed margins, higher fee income, record treasury customer sales and stronger markets trading income more than offset the decline.

Net fee and commission income for the commercial book rose 25 per cent to a record S$1.46 billion, led by a 42 per cent jump in wealth management fees to S$919 million as customers stepped up investment activity.

Treasury customer sales and other income increased 30 per cent to S$681 million, while markets trading income rose 12 per cent to S$469 million, supported by volatile markets and lower funding costs.

Group net interest margin narrowed to 1.87 per cent from 2.05 per cent a year earlier, while the non-performing loan ratio held steady at 1 per cent.

The board declared a total dividend of S$0.81 per share for the quarter, comprising an ordinary dividend of S$0.66 and a capital return dividend of S$0.15, up from S$0.75 per share a year earlier.

Tan said the results reflected structural growth in DBS’ customer franchise, rather than strength in any single business.

“It was really a solid quarter across all the franchises, which suggests that our teams are really building new-to-bank customers, new-to-product customers, and they’re really deepening and strengthening our franchise and customer relationships across the board, across segments, across countries,” she added.

Wealth management remained the biggest growth engine. Wealth assets under management rose 17 per cent year on year and 5 per cent from the previous quarter to a record S$516 billion, while quarterly net new money reached S$11 billion.

Asian trade flows

Tan said DBS continues to see long-term structural opportunities across Asia, spotlighting Taiwan and India as two attractive growth markets.

Taiwan is benefiting from booming demand for semiconductors, artificial intelligence infrastructure and data centres, she said, while India’s expanding middle class, manufacturing ambitions and infrastructure investment continue to support growth.

Beyond wealth, Tan said trade flows within Asia are becoming an increasingly important driver for the bank.

DBS’ measure of “trade outside the US” has risen to 92 per cent from 89 per cent since April last year, reflecting stronger intra-Asian trade.

She pointed to China-India and Taiwan-India trade corridors as examples of structural growth that the bank is well-positioned to capture.

“Trade outside the US is growing, and particularly trade in the Asian intra-Asian regional trade is growing… That’s our game to win. That’s really playing in our backyard,” she said.

Asked about China’s new offshore trust tax rules, Tan said the changes were consistent with DBS’ longstanding strategy of building domestic wealth management capabilities across its core markets, rather than relying solely on offshore booking.

“The trend is coming… you need to provide strong domestic wealth management solutions for clients, whether it’s in (mainland) China, India, Indonesia, Taiwan, Singapore, (or) Hong Kong.”

She added: “If money stays onshore, we’re quite happy, frankly, because we want to build (on) that.”

AI is also increasingly contributing to revenue growth rather than simply lowering costs, Tan said.

She said the technology is helping relationship managers identify investment opportunities, generate customer ideas and provide more personalised advice, while enabling customers to self-serve through the bank’s digital platforms.

And while technology itself is not a competitive advantage, DBS’ innovation culture and proprietary customer data provide durable advantages.

“Our culture of innovation – that is not born overnight, that we built over the last decade or so,” she added. “Our data is another differentiator, and we’ve spent a lot of time, effort and money to really create our data lake, to create artificial intelligence (and) machine learning models – all that takes years.”

Shares of DBS briefly touched a new high of S$75.80 on Thursday before closing 2.1 per cent higher at S$75.08, extending the counter’s year-to-date rally to 33.2 per cent.