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Fundamental View
AS OF 11 Mar 2025DBS Group has sound standalone fundamentals and benefits from its strong home country. Support may be stronger than peers thanks to its longstanding relationship with the government and Temasek’s ~29% stake.
DBS is a major player in Asian corporate banking, and also has strengths in mass market and private banking. It is also one of Asia’s leading digital banks. Acquisitions have been skillfully handled in the past decade or so.
DBS has performed well in recent years, with a high RoE, and its asset quality has been more resilient than that at UOB and OCBC.
Business Description
AS OF 11 Mar 2025- DBS was established in 1968 as a development bank but was subsequently privatised and is now commercially run. The Singapore government retains an indirect stake through its investment vehicle, Temasek (~29%).
- In 1998, DBS moved beyond its wholesale bank origins with the acquisition of POSB that brought along a large mass market customer and deposit base. In 2001, it acquired the former Dao Heng Bank in Hong Kong and in 2008, it acquired a part of the failed Bowa Bank in Taiwan, to supplement its Greater China operations. It also regularly acquired wealth management businesses, such as SocGen's Asian private banking business in 2014 and ANZ's Asian retail and wealth management businesses in Singapore, Hong Kong, China, Taiwan and Indonesia in 2018. Recent acquisitions include Lakshmi Vilas Bank in India, a 16.69% stake in China's Shenzhen Rural Commercial Bank, and Citi's consumer business in Taiwan. The bank is also reportedly considering expanding into Malaysia by purchasing Temasek's 29.1% stake in Alliance Bank Malaysia Bhd.
- As of YE24, Singapore accounted for 45% of its loan book, with HK (14%), Rest of Greater China (13%), South & Southeast Asia (8%) and Rest of the World (19%) accounting for the rest.
- The bank is well regarded as a digital leader in the banking space, and has steadily built capabilities in private banking and markets businesses.
Risk & Catalysts
AS OF 11 Mar 2025Loan growth has been a recent challenge, with continued high repayments in Greater China.
Asset quality has outperformed the other two Singapore majors with very low credit costs. Management expects a slight increase in specific provisions by a few bp in FY25.
The bank encountered some operational issues recently. On 30 April 2024, the MAS removed its restriction on DBS’s non-essential activities, which had been imposed in Nov-23 following IT failures. Its retail payments system had another outage on 2 May 2024.
Non-interest income performance was very strong in FY24, establishing a high baseline for FY25.
Key Metric
AS OF 11 Mar 2025| SGD mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| PPP ROA | 1.37% | 1.14% | 1.32% | 1.60% | 1.69% |
| ROA | 0.8% | 1.0% | 1.1% | 1.4% | 1.5% |
| ROE | 9.1% | 12.5% | 15.0% | 18.0% | 18.0% |
| Equity/Assets | 8.40% | 8.38% | 7.65% | 8.40% | 8.32% |
| CET1 Ratio (fully loaded) | 13.9% | 14.4% | 14.6% | 14.6% | 15.1% |
| NPL Ratio | 1.60% | 1.27% | 1.13% | 1.11% | 1.09% |
| Provisions / Loans | 0.83% | 0.01% | 0.06% | 0.14% | 0.14% |
| Liquidity Coverage Ratio | 139% | 135% | 146% | 144% | 147% |
| Net Stable Funding Ratio | 125% | 123% | 117% | 118% | 115% |
CreditSight View Comment
AS OF 09 May 2025DBS performed well for several years under CEO Piyush Gupta, who was succeeded by Ms. Tan Su Shan in March 2025. It has comfortable capital and well managed liquidity. Temasek is the main shareholder. DBS has grown its various businesses sensibly and has been a leading bank for adopting digital technology, recent technology outages notwithstanding. It has also steadily grown its fee income and its regional businesses. WM and transaction banking have been focuses, with bolt-on acquisitions/stakes in private banking and Asian retail banking, more recently in India (Lakshmi Vilas Bank), China (SZRCB) and Taiwan (Citi consumer business). It delivered record high FY4 profits. Credit costs are very low, despite a 10 bp increase in 1Q25 to build up buffers against tariff uncertainties.
Recommendation Reviewed: May 09, 2025
Recommendation Changed: June 03, 2016
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