DBS’s expanding customer businesses cushioned a weak trading quarter but could not prevent a decline in profit. Commercial-book income increased 4% year-on-year to SGD 5.69 billion ($4.46 billion), while markets trading income contracted 65% to SGD 152 million ($119 million). Group net profit consequently declined 5% year-on-year and 9% quarter-on-quarter to SGD 2.81 billion ($2.20 billion). Growth came from both lending and customer activity. Net interest income rose 4% year-on-year to SGD 3.71 billion ($2.91 billion), supported by balance-sheet growth and hedging despite lower interest rates, while net fee income increased 6% to SGD 1.43 billion ($1.12 billion). Total income nevertheless slipped 1% to SGD 5.85 billion ($4.58 billion), as trading weakness outweighed customer-business gains. Over nine months, net profit rose 2% to a record SGD 8.82 billion ($6.91 billion), while total income increased 2% to SGD 17.9 billion ($14.02 billion). The quarterly setback came despite continued growth in customer balances and activity, underscoring the distinction between expanding the franchise and generating more consistent earnings. Customer treasury sales offset part of the trading decline Markets trading income fell SGD 287 million ($225 million) from a year earlier and SGD 317 million ($248 million) from the second quarter. DBS chief executive officer Tan Su Shan attributed the decline to weaker Asian asset performance, dislocated equity-market volatility, higher interest rates towards the quarter’s end and lower trading volumes. Tan also pointed to the strong second-quarter comparison and the contribution of sizeable prime brokerage businesses to some international banking peers’ performance. She said DBS did not have an integrated prime brokerage business, but already had components including stock custody, market access and trading, and was considering whether to bring them together. Treasury customer sales, by contrast, rose 15% year-on-year to SGD 668 million ($523 million), remaining close to the previous quarter’s record. Together with net fees, they lifted customer-driven non-interest income 8% to SGD 2.10 billion ($1.65 billion). These sales reflect transactions with wealth, corporate and institutional customers, while markets trading income is more directly affected by asset prices, trading volumes and positions. Growth in customer treasury sales reflects DBS’s expanding client relationships as it develops fixed-income, currency and institutional equities coverage. These revenues can cushion trading volatility, but remain sensitive to market conditions and clients’ willingness to transact. Record wealth inflows accompanied softer quarterly fees DBS attracted a record SGD 15 billion ($11.75 billion) of net new money in the quarter, while wealth assets under management (AUM) reached SGD 544 billion ($426.27 billion), up 16% year-on-year in constant-currency terms. DBS chief financial officer Chng Sok Hui said inflows would have approached SGD 20 billion including approximately SGD 5 billion of foreign currency non-resident deposits. Wealth-segment income increased 7% year-on-year to SGD 1.64 billion ($1.28 billion). Wealth fees nevertheless declined 6% from the second quarter’s record as customer investment activity moderated, despite rising 9% year-on-year to SGD 864 million ($677 million). Nine-month wealth fees grew 24% to SGD 2.69 billion ($2.11 billion). The divergence reflects the different drivers of asset gathering and fee generation. New inflows enlarge the asset base available for investment and advisory services, but quarterly fees remain influenced by how actively clients invest and transact. The bank has expanded its relationship-manager capacity and is implementing plans to open 18 wealth centres and upgrade 36. Tan said newly recruited relationship managers were beginning to contribute revenue, with investments in the wealth franchise showing results in Taiwan, Hong Kong and China. Institutional income growth draws on funding and capital Institutional banking added both lending volume and transaction income during the quarter. Group gross loans grew 3% quarter-on-quarter in constant-currency terms to SGD 484 billion ($379.25 billion), with non-trade corporate loans increasing SGD 11 billion ($8.62 billion). Over nine months, non-trade corporate loans increased SGD 28 billion ($21.94 billion). Tan cited financing activity involving technology, media and telecommunications businesses, financial institutions and government land sales. Transaction-services fees rose 8% year-on-year to a record SGD 268 million ($210 million), while institutional treasury customer sales also reached new highs. The two revenue streams have different economics. Loans earn interest but require funding and regulatory capital, while cash management, custody and treasury services can generate fees without a comparable increase in lending assets. DBS is developing institutional investor coverage and related services as Asian capital markets deepen, creating opportunities to earn more revenue from existing corporate and institutional relationships. Funding remains essential to this expansion. Deposits grew 3% quarter-on-quarter, or SGD 16 billion ($12.54 billion), in constant-currency terms to SGD 650 billion ($509.33 billion). Over nine months, deposits increased SGD 42 billion ($32.92 billion) in constant-currency terms. Tan described increasing deposit competition and the bank’s efforts to understand deposit-pricing elasticity and capture market share. Higher balances provide capacity to finance customers, but their contribution to profitability depends on the rates DBS pays to retain deposits and the returns generated from deploying them. Balance-sheet growth and interest-rate hedging helped offset lower Singapore rates. The Singapore Overnight Rate Average (SORA) averaged 1.13% over nine months, approximately half its year-earlier level, creating an estimated net interest income headwind of more than SGD 1 billion ($784 million). Nine-month net interest income was broadly unchanged at SGD 10.8 billion ($8.45 billion), as loan and deposit growth and hedging largely absorbed the impact. In the third quarter, net interest income increased 4% sequentially as loans and deposits grew. Net interest margin (NIM) remained unchanged quarter-on-quarter at 1.87%, nine basis points below a year earlier. Lending growth also increased risk-weighted assets, underscoring the value of earning transaction and service fees from those customer relationships alongside interest income. Operating costs and AI-enabled capacity Third-quarter expenses fell 1% year-on-year to SGD 2.37 billion ($1.86 billion), with a cost-to-income ratio of 41%. Over nine months, expenses increased 2% to SGD 7.02 billion ($5.50 billion), leaving the cost-to-income ratio unchanged at 39%. Tan contrasted the slower pace of expense growth with approximately 8% in earlier periods, linking it to work on technology architecture, data management and workforce capabilities. DBS did not separately quantify savings attributable to artificial intelligence (AI). DBS is deploying AI to extend institutional client coverage and improve operating efficiency. Tan reported fee growth of 19% among Institutional Banking Group Alpha accounts, compared with 11% among non-Alpha accounts, linking the stronger performance to AI-supported client coverage. The comparison does not isolate AI’s contribution from differences in customer composition, relationship coverage or underlying business activity. Tan said DBS was using AI and technology to build capacity for growth, while redeploying employees previously involved in coding to modernise its technology architecture. The bank is also reviewing workflows for wider agentic AI adoption. These changes could support expansion with slower growth in staffing requirements. Greater automation also increases the importance of technology resilience and data governance. Through Project Clear, DBS is strengthening data ownership, accountability and lifecycle management. Tan said the bank discourages customers from sharing credentials with third-party autonomous agents and favours human involvement in final fund-transfer instructions. These safeguards support wider AI deployment while maintaining control over customer transactions. Selective lending limits credit risk as capital is returned Repayments more than offset new non-performing asset formation, reducing non-performing assets 3% quarter-on-quarter to SGD 4.63 billion ($3.63 billion). The non-performing loan ratio improved to 0.9%. Specific allowances were 17 basis points of loans in the quarter and 16 basis points over nine months, below DBS’s stated through-the-cycle range of 17–20 basis points. The bank retained SGD 6.2 billion ($4.86 billion) in allowance reserves, including a SGD 2.4 billion ($1.88 billion) general provision overlay. Tan said DBS had been reducing its exposure to unsecured consumer and small and medium-sized enterprise lending in Indonesia while pursuing selected corporate lending opportunities elsewhere. The reported transitional Common Equity Tier 1 (CET1) ratio declined 0.7 percentage points from the previous quarter to 15.9%, mainly reflecting capital returns and increased risk-weighted assets. Following the Monetary Authority of Singapore’s reduction of its operational-risk multiplier from 1.8 to 1.5 on 4 November 2026, the pro forma transitional ratio was 16.1%. DBS declared an 81-cent third-quarter dividend, comprising an ordinary dividend of 66 cents and a capital-return dividend of 15 cents. Continued lending growth and shareholder distributions place competing demands on capital, making the returns and risk profile of new financing important. The 2027 earnings case rests on rates, volumes and funding costs “Hopefully, we’re past the trough. I do think we are,” Tan said of net interest income. September’s exit NIM was 1.90%, which Chng said had been sustained in October and could be factored into fourth-quarter expectations. DBS expects net interest income growth close to the mid-single digits in 2027, supported by the third-quarter run rate, further lending and deposit growth and a more favourable interest-rate environment. Tan outlined assumptions of average SORA of approximately 1.6%, two further rate increases by end-2027 and a stronger Singapore dollar. Its estimated net interest income sensitivity is SGD 10 million ($7.84 million) per basis-point increase in Singapore rates, against negative SGD 2 million ($1.57 million) per basis point for US rates. The outlook depends partly on the balance between higher asset yields and funding costs. DBS expects deposit growth to normalise towards the mid-single digits and is monitoring whether higher Treasury-bill yields draw funds away from deposits. Stronger Singapore rates could support interest income, but more intense competition for funding may affect deposit costs and the profitability of additional lending. Non-interest income remains sensitive to customer activity and market conditions. Tan indicated that growth could reach low double digits in favourable markets but might moderate to high single digits in weaker conditions. DBS also expects a cost-to-income ratio in the low 40s and specific allowances of 17–20 basis points. For DBS, the question in 2027 is how far to expand lending and client coverage when deposits carry a price, loans consume capital and automation requires continued investment in technology and controls. Greater income from existing wealth and institutional relationships could make earnings less dependent on balance-sheet growth, but that will require DBS to generate more consistent fees while preserving funding and operating efficiency.
