DBS Q3 Profit Drops 5%; Analysts Trim 2027 Targets
Singapore's DBS Group recorded S$2.81 billion in third-quarter net profit, a 5 per cent decline, as analysts lowered price targets following a cautious 2027 outlook.
DBS Q3 Profit Declines
DBS Group reported a 5 per cent reduction in third-quarter net profit, reaching S$2.81 billion. The bank attributed this decrease primarily to diminished trading income from market conditions.
Looking ahead, DBS provided a cautious outlook for 2027, projecting mid-single-digit growth for total income and net interest income, with non-interest income expected to expand in the double or high-single-digit range, dependent on market performance.
This guidance suggested a 2 per cent downgrade to market expectations for the bank's earnings per share, according to Citi analyst Tan Yong Hong.
Analysts Adjust Targets
Following DBS's results and its forward-looking statements, several analysts revised their target prices for the bank. Citi reduced its target to S$80.30 from S$86.60, while CGS International lowered its estimate to S$78.90 from S$79.50. Maybank Investment Banking Group adjusted its target to S$80.52 from S$85.86.
Jefferies also cut its target price to S$88 from S$91, Macquarie decreased its to S$76.40 from S$79.84, and RHB moved its target to S$80.30 from S$81.20. These adjustments mirror similar reductions made to UOB's target prices earlier this week, driven by anticipated pressure on 2027 earnings from narrowing lending margins and rising operating costs across the sector.
Share Price and Underlying Strength
DBS shares concluded trading on Friday at S$69.72, marking a S$1.48 decline. The bank's stock has fallen over 12 per cent from its peak of S$79.05 in September, amid broader concerns for Singaporean bank shares regarding margin compression, deposit competition, and elevated risks.
Despite the Q3 profit dip, analysts from Jefferies, Joanna Cheah and Ang Wei Han, noted a strong underlying performance, highlighting strong net interest income, which rose 4 per cent to S$3.71 billion in Q3, alongside record wealth inflows and strong capital returns. They view the recent price correction as an attractive entry point.
OCBC's head of equity research, Carmen Lee, upgraded her recommendation on DBS to "buy" from "hold", maintaining a fair value estimate of S$78. Lee cited the bank's current price weakness and its role as a proxy for the Singapore economy, supported by a strong Singapore dollar outlook.
Furthermore, DBS has utilised S$400 million of its approved S$3 billion share buyback mandate, suggesting further capital return opportunities.
Maybank's head of Singapore research, Thilan Wickramasinghe, anticipates that DBS's large-scale deployment of agentic artificial intelligence will generate new business avenues, enhance customer loyalty, and control operating expenses, potentially boosting income.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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