DBS’ Tan Su Shan flags second-order risks from Middle East conflict despite limited exposure

[SINGAPORE] DBS has “very limited” direct exposure to the Middle East, but a prolonged conflict that keeps oil prices at or above US$100 per barrel could trigger broader second-order risks, chief executive officer Tan Su Shan said on Tuesday (Mar 31).

“We’ve done a lot of stress tests with our business heads; in terms of first order impact – very little, because our core market is Asia, (and) our exposure to the Middle East is very, very limited,” said Tan.

“Having said that, the second order impact – which is around inflation, around consumer slowdown, around supply chains – that can cause problems,” she added.

The bank is “watchful” of sectors such as automotives, oil and gas, and shipping, amid disruptions linked to the shutdown of the Strait of Hormuz in the ongoing Iran conflict. Small businesses are also an area of concern, although governments have been stepping up support measures, she said.

Tan was speaking at the lender’s annual general meeting held at the Sands Expo and Convention Centre, in response to shareholder questions.

On the macro outlook, she said DBS has not changed its house view of two US Federal Reserve rate cuts in the second half of 2026, despite the ongoing conflict.

Even so, the bank expects to benefit from interest-rate volatility stemming from the “spectre of inflation driven by high oil prices”, including through hedging its exposure.

“The interest rate volatility has actually been good for us, even though we do expect rates to (be) cut in the US,” she said.

‘Structural’ wealth growth

More than 10 shareholders posed questions to DBS’ board at the in-person AGM, covering topics from wealth management performance to capital returns.

Tan said DBS’ wealth clients span about 120 countries, with Singapore and Hong Kong serving as key hubs.

For the 12 months ended Dec 31, 2025, wealth management fees rose 29 per cent to S$2.8 billion, outpacing the 15 per cent increase in overall fee income. Meanwhile, wealth assets under management climbed to S$488 billion, from S$426 billion a year earlier, supported by S$39 billion in net new money.

While AUM is subject to market cycles, the underlying growth trend is structural rather than cyclical, Tan added.

On stock splits, she said DBS has no current plans, noting ongoing efforts by the Singapore Exchange to improve retail participation through reductions in lot sizes.

“So far, retail shareholding has been going up,” she said.

Shareholders also queried DBS’ capital return plans beyond its three-year, S$5 billion programme ending in FY2027, as well as progress on its S$3 billion share buyback.

In response, DBS chairman Peter Seah said excess capital would continue to be returned to shareholders through special dividends, buybacks or other means.

A slightly heated exchange emerged towards the end of the session, when a shareholder questioned the bank’s treasury returns and criticised the price paid for an office floor at The Center in Hong Kong in 2024.

In November 2024, DBS paid HK$646 million (S$106.3 million), or HK$27,028 per square foot, for the entire 75th floor at The Center, a skyscraper in Hong Kong’s central business district. This is after paying HK$700 million, or HK$26,000 psf, for the 66th floor in September.

Tan declined to comment on treasury returns, citing competitiveness, while Seah said the property purchase was not speculative and priced in line with the market.

As the exchange continued, another shareholder intervened, criticising the disruption and calling for the individual to yield the floor.

All resolutions were subsequently passed, including the re-election of Seah as a board director.

Shares of DBS closed down 0.12 per cent or S$0.07 at S$56.90. Year to date, the stock is up 0.9 per cent.