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Issuer Credit Research

Issuer Flash: DBS Group Holdings

Issuer Flash: DBS Group Holdings

Report date: 2026-05-28 Event date: 2026-04-30 Event title: 1Q26 Results

1. Flash Conclusion

DBS Group Holdings ("DBS")'s first-quarter 2026 results reinforced the stable credit view in the latest issuer_summary. Net profit rose 1% year on year to SGD 2.93bn, total income reached a record SGD 5.95bn, and return on equity was 17.0%. Net interest margin declined to 1.89%, but wealth management, customer treasury flows, deposit and loan growth, and trading income absorbed the headwinds from lower interest rates and a stronger Singapore dollar.

From a credit perspective, the result is modestly positive, but does not warrant an upgrade to the credit-quality assessment. Payments and remittances, as well as low-cost deposits, are recurring supports, while wealth management investment products, bancassurance, and trading income remain sensitive to market conditions. The common equity Tier 1 ratio was 16.9% on a transitional basis and 14.8% on a fully phased-in basis. The company's disclosed expected dividend payment was SGD 2.302bn, and we do not read the capital return as undermining bondholder protection. However, this Flash does not recalculate the detailed headroom against regulatory minimums or management's internal thresholds.

2. Announcement Details

On 30 April 2026, DBS released its trading update and results for the first quarter ended 31 March 2026. Total income increased 1% year on year to SGD 5.948bn, and net profit increased 1% to SGD 2.930bn. Compared with the previous quarter, net profit rose 24%.

The impact of lower rates, however, was clear. The group's net interest income fell 5% year on year, and net interest margin declined to 1.89% from 2.12% in the prior-year period. The company explained that the impact of lower interest rates and Singapore dollar appreciation was partly offset by hedges, deposit and loan growth, and balance sheet management. Loans increased 6% year on year on a constant-currency basis, and deposits increased 12% on the same basis.

Non-interest income was strong. Net fee income increased 16% to SGD 1.482bn, wealth management fees reached a record SGD 907mn, and cards and payments-related fees also reached a record SGD 257mn. Trading income increased to SGD 389mn. The board declared an ordinary dividend of SGD 0.66 per share and a capital return dividend of SGD 0.15 per share.

3. Credit Interpretation

The most important point in the results is not that DBS "fully avoided" margin compression, but that it "absorbed it through other revenue sources and its deposit base." For a high-quality bank, the key issue when interest rates fall is how far earnings and capital can remain resilient. DBS still provides a strong answer to that question.

Asset quality is also stable. Non-performing assets declined 3% quarter on quarter to SGD 4.72bn, the non-performing loan ratio was unchanged at 1.0%, and specific allowances were 14bp of average loans. Allowance coverage was 131%, or 200% after taking collateral into account. The secondary effects of Middle East developments require monitoring, but at this stage there are no signs that asset quality is weakening the credit view.

Capital and liquidity are also strong based on disclosed figures. The common equity Tier 1 ratio declined slightly from the previous quarter, but was 16.9% on a transitional basis and 14.8% on a fully phased-in basis, while the leverage ratio was 5.9%, well above the 3% regulatory minimum. For senior bonds, deposits, liquidity, and stable asset quality are the main sources of comfort. For Tier 2 and AT1 instruments, greater attention should be paid to the pace of decline in the fully phased-in common equity Tier 1 ratio and the loss-absorption buffer after capital returns. Current spreads and market prices were not checked for this Flash.

4. Key Metrics

Metric 1Q26 Comparison / Supplement Credit Interpretation
Total income SGD 5.948bn Up 1% year on year; up 12% quarter on quarter Record high. Lower interest rates were absorbed by non-interest income and deposit/loan growth
Net interest margin 1.89% 2.12% in 1Q25; 1.93% in 4Q25 Clear headwind. Remains the top monitoring indicator
Net fee income SGD 1.482bn Up 16% year on year Supported by wealth management, payments and remittances, and loan-related fees
Customer loans / customer deposits SGD 453bn / SGD 630bn Up 6% / 12% on a constant-currency basis Funding base is strong. CASA ratio of 55% is also positive
Non-performing loan ratio 1.0% Unchanged quarter on quarter Asset quality is stable
Common equity Tier 1 ratio 16.9% / fully phased-in 14.8% 17.0% / 15.0% in 4Q25 Headroom remains substantial after capital returns, but the pace of decline should be monitored
Liquidity coverage ratio / net stable funding ratio 151% / 117% Above regulatory requirements Liquidity is strong

5. Items to Check Next

The next focus is whether total income can be maintained at a level comparable with 2025 for the full year 2026. The company referred to SORA of around 1%, deposit growth in the high single digits, and loan growth in the mid-single digits. Based on company disclosure, net interest income sensitivity is positive SGD 11mn per 1bp for Singapore dollar books and negative SGD 4mn per 1bp for US dollar books; the signs follow the company's disclosed presentation.

We will check how far wealth management fees and SGD 10bn of net new money are repeatable, whether secondary effects from China/Hong Kong real estate and Middle East developments appear in asset quality, and how ordinary dividends, capital return dividends, existing capital-policy share buybacks, and the fully phased-in common equity Tier 1 ratio move together.

6. Sources