Analysts raise price targets on DBS after Q1 earnings

[SINGAPORE] Analysts raised price targets for shares of DBS, following its first quarter results release on Thursday (May 8).

The bank’s net profit at S$2.9 billion for the three months ended Mar 31 – 2 per cent lower than the S$2.95 billion from the same year-ago period. However, it beat the S$2.87 billion consensus forecast in a Bloomberg survey of eight analysts.

An interim dividend per share (DPS) of S$0.60 and a capital return DPS of S$0.15 were also declared, reflecting a total dividend of S$0.75 per share for Q1.

Citi’s vice-president of equity research Tan Yong Hong has a “buy” call on the stock with a raised target price of S$47, with DBS their only ‘buy’-rated name among the three local banks.

He said that with the capital distribution plan staying “intact” with an S$0.24 annual DPS lift, it implies an approximate 90 per cent payout ratio across FY2025 to FY2027, where an ordinary DPS translates to a 64 per cent payout ratio.

RHB also kept their “buy” rating on the local bank with an unchanged target price of S$47. Its research team noted how its Q1 results were “in line with expectations”, at 26 to 27 per cent of their and consensus FY2025 profit after tax and minority interest (Patmi).

Its research team also noted that DBS reaffirmed its S$8 billion capital returns commitment, which comprises S$3 billion in share buybacks – of which 9 per cent has been executed so far – and S$5 billion in dividends over a three-year period.

Maybank analysts kept their “hold” rating on DBS, with a higher target price of S$45.26, up from S$38.48.

“DBS’ commitment to capital returns and its ‘safe haven’ status provides a cushion for downside balance sheet risks,” they wrote in their May 8 report.

While net interest margins (NIMs) fell, Maybank analysts observed that net interest income (NII) held up as excess liquidity was deployed to high quality, low yield instruments and loan substitutes.

However, the potential for sizable earnings upgrades amid poor macro visibility is also limited, Maybank indicated.

“Extreme US policy and geopolitical uncertainty across multiple theatres makes us cautious on unknown-unknowns,” they explained. “In past cycles, such as Covid-19 and the operations and maintenance crisis (in the oil and gas industry), despite strong provisions, negative impacts progressed quickly.”

That said, RHB’s research team acknowledges how DBS set aside S$205 million in general provisions to build provision buffers on macroeconomic and geopolitical uncertainties, too.

Both Citi and RHB’s team did note that DBS is “not too concerned” about the first order impact from US tariffs as exposure to vulnerable sectors is only one to two per cent of loans in the auto, consumer discretionary and mining areas to large corporations.

“It is still assessing the impact from the second order but highlighted that exposure to small-medium enterprises and unsecured consumer financing which make up 3 per cent of loans, each. This is not too significant, and it has already been more cautious on these segments in recent years,” wrote the RHB analysts.

To most of the analysts, DBS’ business momentum has been resilient in April and any adverse impact from tariff policy negotiation outcomes are only likely to be felt in the second half of 2025, which include impact on loans growth, and wealth management and loans-related fees.