Trump’s return boosts 2025 profit outlook for Singapore’s DBS Bank

Singapore’s DBS Bank (DBSM.SI) is anticipating a boost in its 2025 profit margins, spurred by potential fiscal policies under Donald Trump’s expected presidency.

Trump’s anticipated approach may involve reduced interest rate cuts from the US Federal Reserve, resulting in a favourable interest rate environment for DBS.

Following the bank’s latest earnings report, CEO Piyush Gupta, at briefing on Thursday, explained how potential US policies could lead to higher net interest margins, which are essential for DBS’s profitability.

DBS, the largest bank in Southeast Asia, reported an impressive net profit for Q3, reaching S$3.03 billion, a record-breaking figure that outperformed expectations of S$2.80 billion.

Despite a slight year-on-year decrease in net interest margins, the bank saw growth across wealth management, treasury customer sales, and trading income, all contributing to its robust earnings.

Trump policies expected to drive favourable economic conditions for DBS

DBS CEO Piyush Gupta, indicated that Trump’s potential fiscal policies might create a more inflationary environment, fuelled by stricter immigration controls, higher tariffs, and increased deficit spending.

This environment could prevent the Federal Reserve from aggressively lowering interest rates, thereby keeping the interest rate environment beneficial for DBS.

With DBS’s operations extending across Asia, Gupta cautioned that the bank would remain mindful of the regulatory and legal challenges the administration might introduce.

Yet, with higher interest rates anticipated, DBS’s financial outlook appears promising, given that the bank could benefit from increased profitability in its core market.

DBS Q3 results surpass expectations, bolstered by wealth management and trading

In the third quarter of 2024, DBS achieved a record net profit of S$3.03 billion, a 15% increase over the previous year, marking its strongest quarterly performance to date.

This figure exceeded its previous quarterly high of S$2.96 billion, set in Q1 2024, despite a minor dip in net interest margin from 2.19% to 2.11% year-on-year.

Fee income from wealth management and strong markets trading revenue underpinned these results, underscoring DBS’s diversified revenue streams.

Over the first nine months of the year, DBS’s net profit rose by 11% to reach S$8.79 billion, a new high for the bank.

Return on equity also improved, growing from 18.6% to 18.8%, a sign of DBS’s successful strategies in an evolving economic landscape.

DBS’s positive performance boosted investor confidence, driving its shares up by 6.9% to an all-time high of S$41.87.

Competitors Oversea-Chinese Banking Corporation (OCBC.SI) and United Overseas Bank (UOBH.SI) also saw gains of 3.5% and 2.3%, respectively, with the local stock index (.STI) rising by 1.8%.

While DBS is poised for growth under anticipated US fiscal policies, it faces regulatory changes in Singapore.

A global minimum corporate tax rate set by the Singapore government is projected to moderate DBS’s 2025 profit outlook, as the tax measure will impact profitability within the region.

The bank’s strong Q3 performance and optimistic forecast suggest that DBS is well-positioned to navigate these adjustments and continue its upward trajectory.

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