DBS Group Holdings Ltd (OTC:DBSDY) Q4 2025 Earnings Call Transcript

DBS Group Holdings Ltd (OTC:DBSDY) Q4 2025 Earnings Call Transcript February 9, 2026

DBS Group Holdings Ltd misses on earnings expectations. Reported EPS is $2.47 EPS, expectations were $2.83.

Edna Koh: Okay. Good morning, everybody, and welcome to DBS’ Fourth Quarter and Full Year 2025 Financial Results Briefing. This morning, we announced for the full year that we achieved record income and profit before tax. Net profit came in at SGD 11 billion with ROE at 16.2%. For the fourth quarter, net profit was SGD 2.36 billion. With us today are our CEO, Tan Su Shan; and our CFO, Chng Sok Hui. Without further ado, let me invite Sok Hui to give us more color.

Sok Hui Chng: Good morning, everyone, and happy Chinese New Year in advance. Okay, Slide 2. On the highlights, we delivered a strong set of results for full year 2025. Pre-tax profit rose to a new high of SGD 13.1 billion. Return on equity was 16.2% and return on tangible equity was 17.8%. Total income grew 3% to a record SGD 22.9 billion despite a challenging rate environment. Average SORA and HIBOR both fell by almost 2 percentage points, and there were adverse translation effects from a strong Singapore dollar. Group net interest income was nonetheless modestly higher, driven by record deposit growth and proactive balance sheet management. Fee income and treasury customer sales both grew double digits and reached new highs, led by Wealth Management.

Markets trading income rose to the highest level since 2021. The cost-to-income ratio was unchanged at 40%. Net profit was 3% lower at SGD 11.0 billion. This was due to higher tax expenses of SGD 400 million from the consequential implementation of the 15% global minimum tax. For the fourth quarter, pre-tax profit was SGD 2.8 billion, down 6% from a year ago. Total income declined 3% to SGD 5.33 billion as higher fee income and treasury customer sales were offset by the impact of rate headwinds and the absence of non-recurring gains recorded a year ago. Asset quality remains sound. A previously watchlisted real estate exposure was prudently recognized as an NPL during the quarter, contributing to higher specific allowances. The impact was partially offset by a release of general allowances set aside in prior periods.

Allowance coverage stood at 130% and at 197% after considering collateral. Capital levels stayed strong. The transitional CET1 ratio was 17.0% with a fully phased-in ratio at 15.0%. The Board proposed a final total dividend of SGD 0.81 per share for the fourth quarter, comprising a SGD 0.66 ordinary dividend, up SGD 0.06 from the previous payout and a SGD 0.15 capital return dividend. The Board remains committed to managing down the stock of excess capital and barring unforeseen circumstances, plans to maintain the SGD 0.15 per share capital return dividend each quarter through 2026 and 2027. Full year performance. Slide 3. For the full year, total income and pre-tax profit were records. Group net interest income was modestly higher at SGD 14.5 billion, a new high as record deposit growth and proactive hedging offset the impact of rate headwinds.

Within this, commercial book net interest income fell 4% or SGD 549 million as net interest margin narrowed due to the rates impact. Fee income rose 18% or SGD 730 million to a record SGD 4.90 billion, led by Wealth Management. Commercial book, other non-interest income was SGD 2.13 billion. Treasury customer sales to wealth and corporate clients grew 14% to a new high, but the increase was offset by lower other income, which had non-recurring gains a year ago. Markets trading income rose 49% or SGD 452 million to SGD 1.37 billion, the highest since 2021, benefiting from lower funding costs and a more conducive trading environment. Expenses increased 4% or SGD 354 million to SGD 9.25 billion, led by staff costs. The cost-income ratio was unchanged at 40% and profit before allowances rose 2% or SGD 249 million to a new high of SGD 13.7 billion.

Q&A Session

Total allowances were 27% or SGD 169 million higher at SGD 791 million. Specific allowances were SGD 854 million or 19 basis points of loans, largely due to the real estate NPL in the fourth quarter. General allowances of SGD 63 million were written back during the year, including the release of allowances previously set aside for the real estate exposure. There was a one-time item relating to the bank’s CSR commitment announced in 2023 to allocate up to SGD 1 billion over 10 years to support vulnerable communities. With SGD 100 million set aside from the year’s profits, the cumulative amount since 2023 for CSR stands at SGD 300 million. Next slide, fourth quarter year-on-year performance. For the fourth quarter, pre-tax profit was SGD 2.80 billion, 6% lower than a year ago.

Group net interest income declined 4%. Within this, commercial book net interest income fell 6% or SGD 239 million to SGD 3.59 billion as net interest margin narrowed due to the rate headwinds. Fee income rose 14% or SGD 131 million to SGD 1.10 billion, led by Wealth Management. Commercial book other non-interest income was SGD 486 million, within which treasury customer sales rose 13% or SGD 56 million. Expenses declined 1% or SGD 23 million to SGD 2.37 billion. The cost-to-income ratio was stable. Profit before allowances was SGD 2.96 billion, 5% or SGD 151 million lower. Total allowances were unchanged at SGD 209 million as higher specific allowances were offset by a write-back of general allowances. Next slide, fourth quarter, quarter-on-quarter performance.

Compared to the previous quarter, fourth quarter net profit declined 20%. Group net interest income was marginally higher. Within this, commercial book net interest income rose 1% or SGD 34 million as deposit growth momentum was sustained. Deposits increased SGD 16 billion or 3% in constant currency terms, offsetting the impact from lower SORA. Fee income fell 19% or SGD 258 million and commercial book other non-interest income declined 16% to SGD 92 million due to seasonally lower client activity. Markets trading income fell 65% or SGD 285 million from the previous quarter’s high base and seasonal factors. The business also took the opportunity to rebalance the portfolio, which will position us well for 2026. Expenses declined 1% or SGD 21 million to SGD 2.37 billion.

Specific allowances were higher, partially offset by a general allowance write-back. Next slide, net interest income. Compared to the previous quarter, group net interest income was marginally higher at SGD 3.59 billion. Net interest margin declined 3 basis points to 1.93% as SORA continued to trend lower during the quarter. The impact of lower rates was offset by two factors. First, balance sheet hedges that have been proactively increased over the past few years helped mitigate the decline in net interest margin. Second, deposit growth remains strong. Deposits rose SGD 16 billion or 3% in constant currency terms during the quarter, bringing the full year increase to SGD 64 billion or 12%, the largest absolute increase in the bank’s history.

The growth outpaced loans and the surplus was deployed into liquid assets. This was accretive to net interest income and return on equity, though it modestly reduced net interest margin. For the full year, group net interest income was modestly higher at SGD 14.5 billion as balance sheet hedging and deposit growth offset the sharp declines in SORA and HIBOR as well as adverse FX translation from a stronger Singapore dollar. Commercial book net interest income declined 4% from a lower net interest margin. Next slide, deposits. During the quarter, total deposits rose 3% or SGD 16 billion in constant currency terms, mostly from CASA inflows. CASA, current and savings account increased in both Sing dollars and foreign currencies. Sing dollar CASA rose from seasonal year-end retail inflows and a continued shift of funds from treasury bills back into deposits.

Foreign currency CASA growth was driven by both wealth and corporate clients. For the full year, total deposits grew SGD 64 billion or 12% in constant currency terms, the largest absolute increase in the bank’s history with over 2/3 of the increase in CASA. Liquidity remains healthy. The group’s liquidity coverage ratio was 155% and net stable funding ratio was 117%, both comfortably above regulatory requirements. Next slide, loans. During the quarter, gross loans rose 2% or SGD 10 billion in constant currency terms to SGD 451 billion. The increase was led by trade loans with modest increases in non-trade corporate and Wealth Management loans. As deposits continue to grow faster than loans, the surplus was deployed into liquid assets. This was accretive to net interest income and return on equity.

For the full year, loans rose 6% or SGD 24 billion with broad-based growth across trade, non-trade corporate and Wealth Management loans. And you can see from the chart, the high-quality liquid assets for the year increased by SGD 42 billion. Fee income, next slide. Gross fee income rose 15% for the full year to a record SGD 5.86 billion. Growth was broad-based and led by Wealth Management, which increased 29% to a new high. Transaction service and loan-related fees also reached record levels, while investment banking fees strengthened. For the fourth quarter, gross fee income rose 12% from a year ago to SGD 1.38 billion. The increase was led by Wealth Management fees. Transaction service and investment banking fees were also higher. Compared to the previous quarter, gross fee income declined 13%.

Wealth Management and loan-related fees fell due to seasonal factors, while transaction service fees were lower compared to a strong third quarter. The declines were partially offset by higher card fees. Next slide. Wealth Management segment. The Wealth Management segment comprises Treasurers, Private Client and Private Bank. Wealth Management was a key growth driver for the year. Full year segment income rose 9% to SGD 5.68 billion, underpinned by record investment product and bancassurance sales. Assets under management grew 19% in constant currency terms from a year ago to a new high of SGD 488 billion. This quarter, we have started to disclose net new money at the bottom of this slide. The figures include inflows from Treasures, Treasures Private Client and the Private Bank.

Total inflows for the three segments were SGD 12 billion for the fourth quarter, bringing full year inflows to a record SGD 39 billion, 21% higher than 2024. For the fourth quarter, segment income rose 5% from a year ago to SGD 1.30 billion, driven by higher non-interest income from stronger investment products and bancassurance sales. This more than offset a decline in net interest income from lower rates. Next slide. Customer-driven non-interest income. This slide shows non-interest income from the commercial book that’s customer-driven. While fee income and treasury customer sales are recorded under different P&L lines due to accounting treatment, both are driven by consumer and corporate demand for financial solutions and should be viewed together.

For the full year, customer-driven non-interest income rose 16% to SGD 7.04 billion as net fee income rose 18% to SGD 4.90 billion and treasury customer sales grew 14% to SGD 2.14 billion. Both were at new highs, driven by broad-based growth and led by Wealth Management. For the fourth quarter, growth momentum remains strong. Customer-driven non-interest income rose 13% from a year ago around the average pace over the prior four quarters. The performance reflected our continued efforts to broaden and deepen relationships with wealth, corporate and institutional clients. Next slide, expenses. Expenses were tightly managed. Full year expenses rose 4% from a year ago to SGD 9.25 billion, led by higher staff costs. The cost-to-income ratio was unchanged at 40%.

Fourth quarter expenses were 1% lower, both quarter-on-quarter and year-on-year at SGD 2.37 billion, driven by lower staff cost. Next slide, Hong Kong. Hong Kong’s full year net profit rose 3% in constant currency terms to a record SGD 1.61 billion as total income increased 6% to SGD 3.52 billion, driven by higher non-interest income. Net interest income was 3% higher at SGD 2.09 billion from deposit growth. Net interest margin was slightly higher as the impact of lower HIBOR on the commercial book was offset by an improvement in markets trading. Deposits rose 10%, led by CASA inflows, while loans grew 1%. Surplus deposits were deployed into non-loan assets supporting net interest income. Net fee income rose 22% to SGD 993 million, led by Wealth Management.

Other non-interest income was 7% lower at SGD 441 million as lower markets trading non-interest income was partially offset by higher treasury customer sales. Expenses increased 3% to SGD 1.33 billion from higher staff costs. Total allowances doubled to SGD 296 million, reflecting higher specific allowances largely from the real estate NPL in the fourth quarter. Next slide, non-performing assets. The NPL ratio was unchanged from the previous quarter at 1.0%, notwithstanding the recognition of the real estate exposure as an NPL in the fourth quarter. The exposure have been on our watchlist for 2 years. The borrower is currently not in default status. We reviewed the credit and took a prudent decision to downgrade it to NPL following our subjective default assessment.

Next slide, specific allowances. Specific allowances for the fourth quarter rose to SGD 415 million with a large part of the increase due to the real estate NPL based on asset recovery values. The increase was partially offset by a release of general allowances that had been previously set aside for the exposure. For the full year, specific allowances amounted to SGD 845 million or 19 basis points of loans, broadly in line with our through-cycle average. Next slide, general allowances. As at end of December, total allowance reserves stood at SGD 6.28 billion, comprising SGD 2.42 billion in specific allowance reserves and SGD 3.86 billion in general allowance reserves. The slight decline in GP reserves from the previous quarter was partly due to the release of general allowances previously set aside for the real estate NPL, which were reclassified to specific allowances.

As communicated previously, we set aside GP once the case is placed on the watchlist. In the event that the watchlisted case is classified as NPL, the GP set aside will be released. General allowance reserves remain prudent with the GP overlay at SGD 2.4 billion out of the total SGD 3.86 billion. So to recap, the GP overlay of SGD 2.4 billion is in addition to baseline GP generated by the model, and it takes into account stress scenarios such as heightened geopolitical and macroeconomic risk. Allowance coverage was at 130% and at 197% after considering collateral. Next slide, capital. The reported CET1 ratio increased 0.1 percentage points from the previous quarter to 17.0%, driven by profit accretion and stable risk-weighted assets. On a fully phased-in basis, the pro forma ratio was 15.0%.

The leverage ratio was at 6.2%, more than twice the regulatory minimum of 3%. Next slide, dividends. The Board proposed a final total dividend of SGD 0.81 per share for the fourth quarter, comprising a SGD 0.66 ordinary dividend, up SGD 0.06 from the previous payout and a SGD 0.15 capital return dividend. This brings the total dividend for the year to SGD 3.06 per share or SGD 8.68 billion, an increase of 38% from the previous year. Assuming dividends are held at SGD 0.81 per quarter, annualized dividends will be SGD 3.24 per share, representing a dividend yield of 5.5% based on last Friday’s closing share price. Next slide. In summary, we delivered record full year pre-tax profit and achieved a 16% ROE, demonstrating the resilience and adaptability of our franchise amidst rate and tax headwinds.

Fee income and treasury customer sales reached new highs, led by Wealth Management, while deposit growth was the strongest in the bank’s history. While rate pressures and geopolitical tensions are expected to persist, the quality of our franchise and strong balance sheet provide a solid foundation for the year ahead. Thank you for your attention. I’ll now hand you to Su Shan.

Tan Shan: Thank you, Sok Hui. So slide, please. So when I look back at 2025, and I think about all the things that we can’t control. You can’t control geopolitics. You can’t control where interest rates go, you can’t control where the FX goes or the market goes, and you can’t control where tax goes. So we really had the perfect storm in 2025 in terms of rates, where SORA and HIBOR went in terms of the FX, strong Sing dollar and also our tax rates, as you know, went up. Notwithstanding all these really what we call a perfect storm in the macros, the fact that DBS delivered record group total income, record net — group net interest income in spite of the rates, record fee income, but more pleasing, record net profit before tax — sorry, record PBT, profit before tax.

But more pleasing for me was the record in volumes. You saw, Sok Hui talked about the record in deposit growth, 12%. I was also very happy to see the record net new money growth, which is structural, record AUM. And I think this suggests that I think our engines are firing okay, right? So record total income and PBT. I would credit the group net interest income reaching a profit in spite of those headwinds to our teams doing a really good job both on nimble balance sheet management, on also increasing our fixed rate assets that went up to SGD 210 billion. And also all the teams firing on all cylinders on gathering deposit growth. This, I can attribute to the hard work we’ve done over the past in using AI, using machine learning, using contextual nudges, all the hard work that we’ve done to gather new-to-bank customers, to be customer-centric, to have our nudges automated and to use AI smartly.

So I think the snowballing effect of volume growth is happening. In terms of markets, we had the highest markets trading since 2021. Markets trading income rose 49% to SGD 1.37 billion. And because 2025 was such a good year for trading, we decided to take advantage of it and to rebalance our portfolio in the fourth quarter. Fourth quarter normally is down, is seasonal, right? By December, everybody close their books, go on holiday. So fourth quarter is normally quite seasonal. We are off to a strong start in 2026. January was very good indeed. We saw Wealth Management as well, a record high total income at SGD 5.7 billion. And more pleasing was the Wealth Management’s non-interest income, which is the fee income was up 27%. It’s strong everywhere.

Offshore wealth, onshore wealth, we saw growth in China, India, Indonesia, Taiwan, and then the two big hubs of Hong Kong and Singapore also, both growing very nicely. We talked about — Sok Hui has now told us that, we will start sharing the AUM growth for all three segments. It’s important for you to understand that DBS has the wealth continuum. So we look at wealth holistically because we don’t believe that wealth is static. We believe that wealth grows. And so you start with the priority bank, which is Treasures. You go up to Treasures Private Client, which is where you become an A accredited investor, you start to invest more. And then you go up to the Private Bank where you get access to more sophisticated products. All that continuum, we really got very seriously.

And that’s what I think has been our secret sauce in growing our Wealth Management franchise. So delivering high ROE, that was really structural growth. I think all the structural stuff that we said, be it Wealth Management, be it in IBG, we saw structural growth in TMT, especially around the tech ecosystem. We saw structural growth in the financial institutions group, especially around the institutional equity space. We saw a recovery in Investment Banking, a long-awaited IPO market finally came back in 2025, both Hong Kong and Singapore are doing remarkably well. But also in payments, I think this is what I was pleased with. In terms of payments transaction services, so DBS was named the Best Bank for Cash and Corporate Banking in Asia by Coalition Greenwich.

Coalition Greenwich is rated by the customers, not by us. You can’t pitch for it. The customers rate you. And I think that was validation of the good work done by the GTS and IBG team. And also pleasing was the record loan-related fees. So this is where we start to win loan structuring mandates, right, as the lead bank. So loan-related fees was up 14% to SGD 733 million. And we really captured growth in the event-driven space. So it’s quite a lot of big chunky deals that came in. This is event-driven, LBO, structured deals, M&A, et cetera, and that was up some 59% year-on-year. So I’m pleased to see that we are winning wallet share, mind share and going up the tiers with our clients. So asset quality remains sound. Our NPL ratio remains stable.

As Sok Hui alluded, we did take a subtractive NPL in the fourth quarter. It’s important to say that the customer has not defaulted, but we have watchlisted this name for some time now, and we have set aside some GP. So overall, we are comfortable on our exposures. The GP reserve remains sufficient. And just to remind you, the GP reserve, the GP overlay stands at SGD 2.4 billion. Next slide. And just to recap, again, the ordinary dividend increased by SGD 0.06 to SGD 0.66, capital returns of SGD 0.15 per quarter that will be maintained for this year and next year. And so, with the fourth quarter total dividend of SGD 0.81, we’re looking at SGD 3.24 for the year going forward. And of course, being a purpose-driven bank, we want to continue to contribute.

We made a 10-year commitment. We will stick to the commitment of SGD 100 million to support vulnerable segments. And we have since given SGD 300 million in contribution since 2023. Okay. So what’s our 2026 outlook? I think it’s hard to predict. So I tell all our clients buckle up, it’s going to be a volatile year. I mean, first week of January, we have Venezuela. We had Greenland. We had — and then further down the month, we had Bitcoin, we had dollar diverse — well, there’s dollar movements, Japanese elections, Thai elections. There’s a whole host of things. It feels like a year condensed into a month, and people are getting used to such volatility. And because of such volatility, I think our customers will still want to look for stability.

They want to look for resilience. They want to look for reliability, and they want to diversify their concentrator exposures, whether it’s in currencies, it’s in markets or in supply chains. They’ll be looking for the safe haven. They’ll be looking for dependable long-term partners. And here, I hope that DBS will continue to be a beneficiary of these global volatile wins, right? We want to be standing out as a safe, long-term dependable and future forward bank. So what’s our outlook? Our outlook for total income will be around 2025 levels in spite of the rate headwinds. And that is because we’re assuming SORA of 1.25. So the SORA has come down, as you know, some 200 bps from last year. We’re predicting two more rate cuts, and we’re predicting the dollar to remain strong.

However, like last year, we are looking for strong growth in deposits. We continue to look for strong growth also in volumes in terms of net new money. We will continue to be nimble. There’s the good thing about volatility is you get some — you have risk, but you also have opportunities. When markets are very volatile, you can trade, you can be nimble, you can also lock in hopefully some good rates during the market falls. So we want to continue to capture this volatility that will give us hedging opportunities and also growth. Commercial book non-interest income growth to be in high single digits. But for Wealth Management, we are looking for mid-teens growth. So again, continued structural tailwinds continuing for next year. We’ll also continue to grow our FIC business, our GFM business, et cetera.

Continuing our cost discipline around costs, mid-single-digit expense growth, so around 4% compared to the last few years of 8%. This is indicative of where we want to go. And SP should be pretty comfortable between 17 to 20 bps. Again, depending on the macroeconomic situation and the geopolitical situation, we might have some room for GP write-backs this year as well. So for net profit, we’re looking at slightly below 2025 levels. But as I said, we will maintain our cost discipline. We will maintain our credit discipline. We will maintain our operational discipline. And all this underpinned by continued work to make our tech resilient through automation and AI, to make our data resilient through focus on cybersecurity and data life cycle management.

And most importantly, we will continue to upskill our people. The adoption of AI, the speed of which has been strong. And we can basically free our staff from mundane work, administration work and use AI to upskill them. And this is the work that we are doing right now, which is exciting for us. So for DBS, looking forward, we want to keep the three moats to stay ahead. What are the three moats? We believe we have a moat in data. We have good precious customer data that we can use as a moat that we got very, very seriously. We have a trust moat. I think we have proven to be a safe bank through thick and thin and trusted and a dependable bank and strong credit ratings. And we have a cultural moat. I think our staff, I’m very proud of our staff’s ability to be nimble, to be agile, to work with new technologies and to work with new ways of working.

So this enables us to build a long-term firm foundation for growth. That’s it from me.

Edna Koh: We’re now happy to take questions. [Operator Instructions] First question to Chanya.

Chanyaporn Chanjaroen: Rthvika and I have questions. The first one, given the record high deposit, are you looking to lend it to MAS like what you did in the previous year? Second, any colors on the Hong Kong specific provisions that you said, what do you call it, subjective assessment, but can you give details on — or colors on that? Third question is on Indonesia. Given the outlook downgrade by Moody’s, what do you see in terms of impact and particularly on your loan book? Are you lending more over there? And Rthvika has one question as well.

Rthvika Suvarna: You mentioned 4Q expenses benefited from lower staff costs. Can you expand a little bit if this leads to headcount reduction and quantify it perhaps? And is this optimization continuing into 2026?

Tan Shan: Okay. I mean so, and I can take all the questions together. So certainly, as we gather deposits, deposit growth have been stronger than loan growth. We reinvest the surplus deposits into high-quality HQLAs, right? So it’s across the board in different good credit rating — good credit rated, high-quality assets, government bills, et cetera. In terms of the Hong Kong SP, we cannot mention names. And you’re right, it’s subjective, but we are comfortable that — because, as I said, we reduced our GP to increase our SP. So we were already prudent in the past. So this is, it shouldn’t be any surprise to anyone. In terms of Indonesia, I think this will be good in the long term for Indonesia. Short term, there is some market volatility and some market pain.

But I think the long-term implications for increased transparency, governance, increased free float and all that, it’s a good thing, right? And the swift action taken by the authorities, I mean, right after the announcement, you saw a lot of announcements coming out from the authorities, I think, is quite commendable. Our books in Indonesia are pretty focused around the large quality blue-chip names. We’ve looked at it over and over again, I really don’t have too much concerns about the credit quality there. It’s not a big exposure anyway. So I think it should be okay. And then the fourth quarter, lower staff cost, that’s because we fully — there was the LVB integration in India, and then there was the Citi Taiwan integration. So post integration, we have a lot of dual jobs that were rolling off, right?

So that was — a big chunk of that was the rolling off of the post-integration synergies from the two countries. Looking forward, I know where your question is going. I do think that AI, whether it’s generative agentic or just traditional machine learning type of AI will change the way white-collar jobs. This is the world. It’s not DBS alone or Singapore or Hong Kong or Asia alone. It’s the world. But companies that embrace this new technology embrace it and look to use it to your advantage. That means human and machine interaction is important. How do you train humans to work with machines? How do you train humans to use agents safely, but also to use it to increase your capacity to move them to higher order roles? Frankly, I’m excited. So the work that we are doing right now is precisely that to retrain, whether it’s our engineers, our RMs, our call center people, our operations people, everybody, everybody in DBS is trying to adapt to this new way of working, which we want people to feel safe to learn and to use this new capacity, this new superpower that you now have to do a higher order role.

You want to, Sok Hui?

Sok Hui Chng: I think the only thing I would add is that fourth quarter, I think our results were not so good compared to third quarter. So you should expect that we accrue less bonus. So it’s a natural effect of a drop in staff costs as well.

Edna Koh: Anyone else have a question?

Unknown Attendee: So congratulations Su Shan and Sok Hui on the strong and credible set of results, especially with the perfect storm you mentioned. Looking at the year, the different segments have carried the bank differently, retail funding, corporate lending, wealth advisory and distribution and treasury flows, each contributing their own way. Do you see DBS is getting through a transition in your earning model? Or this is already the new shape of the business? And within that, how do you see the role of the retail franchise here in Singapore and Hong Kong? And how has that changed in our mind? And what changes in customer behavior stood out for you in the year? That’s first question. Second question is, with the RMB clearing role only now starting, how does it actually add to your existing transaction or treasury businesses?

Does it deepen operating balances and client mandates? Or is it mainly to improve settlement efficiency for flow you already handle? How do you intend to scale that? You mentioned about AI. How is AI changing the business or how the bank is run in the efficiency or decision being made, revenue being generated? Do you have like a data value capture equivalent for AI?

Tan Shan: A lot of very big questions, all of them. So to your first question, which is basically, do I see this as a new shape of DBS’ business? Look, I think that we are in two big financial hubs, right, Hong Kong and Singapore. And as long as deposit growth continues to be strong, these are two big financial hubs. So Hong Kong benefits from southbound flows from China. Singapore benefits from global flows as well. So both these flows are structurally good for us. If deposit growth continues to be stronger than loan growth, then we will continue to deploy them in HQLA. That’s just the trend that we’re seeing. In terms of, is there a new shape? So we think it’s going to continue to be a bit of a K-shaped economy. So unfortunately, the strong will get stronger.

Some of the SMEs are still seeing some stress in the system. There are some segments particularly suffering more than others. And they might need more help from governments, et cetera. Then in our other core markets, we have structural strong growth in India. That will continue a pace. China looks to be in recovery. Indonesia has some short-term challenges. But again, structurally, long term, we remain constructive on Indonesia in the long term. Taiwan has been a fantastic growth story and will continue a pace because of the tech hardware as well as the onshore wealth growth. And they are also promoting onshore wealth management. So there are structural tailwinds, which we want to harness. There will be headwinds in terms of markets and rates and FX, we just had to maneuver and manage.

And we have to be aware of the K-shaped kind of economy and reduce risk where we think there are still credit headwinds in some segments. Your second question around the RMB clearing role, yes, we were — we announced it in December. We think that the role of RMB has risen as a trading currency, as an investment currency, and that will continue. So yes, there will be mandates to be won. The team is working very hard to do it. The dollar dominance will still be — I mean, dollar is still 80% of the world’s trade financing is still cleared in dollars. But RMB, euro, people want to diversify and those who trade with China may want to use RMB as a currency for trade. But as the world also diversifies and if people want to invest in RMB or they want to use it as a payment currency, I think that trend will also be there.

And then AI changing — changes to the business, I can share that we call it Operating Model Transformation, OMT for short. And here, we have different OMTs in the bank. Examples would be KYC, credit memo writing. So Kwee Juan, who’s our IBG head together with Kian Tiong, our credit head, their teams have worked together to create an OMT around credit memo writing, and the AI can really help to shorten that whole process. Wealth management and retail, Tse Koon and the team also have several OMTs. Our COO office has done an OMT around operations. So using more of the chatbot to answer queries. And so there’s — we’ve got quite a few different OMTs, as you will. But since the advance of generative AI, we already rolled it out, and we said there are horizontal use cases, which all in country can use the DBS GPT, which we rolled out middle of last year.

The first rollout, not so good. But after that, it got better and better and better. And we are seeing already people using it for myriad things from translation to what are your policies and procedures to how do I answer queries internally, externally, et cetera. So I think quite good usage, 60-over percent using it very actively. With the rise of agents, Agentic AI, we have also come up with our own framework to make sure that it’s safe. We have guardrails around the use of personal agents, team agents, enterprise agents, et cetera. As for the DVC, traditionally — when we were using machine learning AI models, which are more deterministic and rules based, we use A/B testing to derive the economic value, right, whether it’s real revenue growth, cost base or loss base.

But when you have — whether it’s Agentic AI, Generative AI or others to supplement what we do, I think it will be harder to separate it out, because everyone is going to be using it. So we’ll have to rethink how do we do a deliver a DVC, as you said. We haven’t landed. We might still try to capture the economic value based on what we’ve been doing in the past, which is A/B testing. But I suspect there will be a lot more in terms of capacity building and speed of the resolution of tech debt, for example, what used to take months, many months, years can now take weeks, right, for example. And that time save, we can deploy to newer things to grow, because we still need to grow. The team needs to grow on wealth. We need to grow on trading. We need to grow on financial institutions, on tech, on GTS, payments.

There’s so much growth that we need to build. But I think what excites us is the ability to use what we can harness from capacity to then redeploy for growth.

Unknown Attendee: Can I have a follow-up question just on your K-shaped economy growth going forward? How are you tackling the kind of the lower trajectory growth area? Are you derisking those areas, repricing those areas? And those are segments as well as geographies?

Tan Shan: Yes. So we’ve been always very supportive of our SME and SME plans, and we’ll continue to be supportive. What we do is we do constant stress test. I mean, since COVID, I think this whole stress testing we’ve been second nature to us. And we try to stay ahead of these trends so that we can actually proactively identify the weak cases and help them through it. You can help them. You can do M&A, you can give them for warning to reduce risk, et cetera. We have certainly in our portfolio reduced risk in, for example, the consumer side, the unsecured loan space. And we’ve been very thoughtful in our SME space as well.

Edna Koh: Ngui from Reuters.

Yantoultra Ngui: Just a follow-up on Indonesia. How do you kind of plan to navigate the near-term headwinds despite the longer-term outlook?

Tan Shan: Well, as I said, we have been looking at our book. And we — I don’t think there should be any panic. I think, as I said, I do believe that structurally, this is good for Indonesia in the long term. And Indonesia is a very resilient country. They’ve been through a lot of ups and downs, but the fundamentals of the country in terms of resourcing, in terms of their ambition to adopt AI, their ability to be resilient will still be there. As I said, I don’t think our exposure is too large. We are very focused on the quality names as well. So in the short term, I’m not too worried. In the long term, I see this as a net positive. But Kwee Juan, my IBG head is here, you want to supplement anything?

Kwee Juan Han: Yes. So I think for as Su Shan said, for Indonesia, right now, we are continuing to support the larger clients there. And what you see in terms of the market volatility relates to the market, whereas we lend to the operating company that are generating the cash flows, so the day-to-day is not affected by the market. And so, I think that’s the differentiation that we need to see. And as Su Shan said, the overall improvement in the way the market is going to be mobile managed, it’s a plus for the market itself.

Edna Koh: Any other questions? Okay. Goola?

Goola Warden: Anyway, congratulations for the results. It was a tough year. But I’m just wondering, you said that you want to deploy the surplus deposits into HQLA, and you mentioned that a couple of times. But is there no loan growth? I mean, because ideally, you should have put it into loan growth. That’s one question. And second question is on the types of HQLA, the sovereigns and how can that be NII accretive? That’s the other question. And then, of course, for NIM, what was your exit NIM? How do you see NIM developing into 2026? And has your NIM sensitivity dropped because of the way you manage your book?

Tan Shan: Okay. I’ll take the first, and then you can take the second. So I want to address the question on loan growth. We are still forecasting loan growth to grow by mid-single digits. So it’s not like we’re not seeing loan growth, we are. And as I said earlier on, we are actually structuring a lot of deals. So frankly, as rates come down, the deals will start to come in, right? January was indicative of — if any January is indicative of the year, we’re very busy on large corporate loan growth. We see growth also in other areas, even mortgages, the new mortgages coming through the door also saw steady growth. So it’s not like we’re not seeing loan growth. We are — just that deposit growth was so high, right? It’s higher than the actual loan growth has been quite steady at, say, 5%, 6%, whatever percent, right? So this keeps growing, but deposit growth has been stronger. That’s why there’s a delta. You want to address for NIM?

Sok Hui Chng: Yes. So deposits, we can generally deploy deposits that come in on an average about 1 percentage point NIM. So that’s not an issue. You can also write the yield curve, take a view if the rates are constructive. So putting into HQLA, frankly, is good because the ROE is very high, and we only put into mainly sovereigns. So it’s not that we are taking big risk running any HQLA portfolio. So you can see it in our Pillar 3 disclosures. On the question about NIM, our fourth quarter NIM was 1.93%. Our January NIM is of 1.92%, so it’s been fairly stable at the group NIM level. And sensitivity actually — has actually increased for Sing dollars, because as more and more deposits come in, there’s more sensitivity to the SORA, which is a good thing. If rates go up, you benefit more.

Goola Warden: Have the deposits been coming in, in Sing dollars more than U.S. dollars?

Sok Hui Chng: It’s a mix. You can see the data point. I think we disclosed it as well. Sing dollar CASA, you can see grew SGD 28 billion this year. Foreign currency CASA grew SGD 19 billion. These are the chunks of deposits that came in and FDs grew SGD 17 billion. So very strong growth in the deposits.

Goola Warden: So one last question on this HQLA. So does the USD go into U.S. sovereigns? And does the Sing dollar deposits go into Singapore government securities?

Sok Hui Chng: No, no, it doesn’t work like that. We can — through, sort of, cross-currency swaps and all that, we will manage to the overall margin level that is actually the best for the book.

Tan Shan: No, we try to optimize.

Goola Warden: Okay. And then the other concern was your foreign exchange.

Sok Hui Chng: We have no — we don’t take FX exposure. It’s all hedged out. So just be assured, we have a good machinery to do hedging.

Edna Koh: Russell, Asian Bank.

Russell Pereira: Congratulations again on the record results. My question is mainly on IBG with the AI-driven investment up cycle and as well as electronics rebound, the intra-Asian growth as well as trades outside of U.S. and export, import, et cetera. Did you notice or did you see any sort of particular areas that you would like to strengthen your position in for IBG and outside of the RMB clearance?

Tan Shan: Okay. I will start and then Kwee Juan, if you want to supplement. So yes, I mentioned that for IBG, there’s some structural tailwinds in both TMT, which is tech, data centers, the whole AI growth in AI, CapEx, but also in financial institutions and II as people are putting more money to work in capital markets, the capital markets growth, insurance growth, all that’s structural, right? And that will continue. And as money flows into the Asian markets, that structural trend will also continue. In terms of trade outside the U.S., you’re right, we — our economist calls it TOTUS, right, T-O-T-U-S. And that figure has grown certainly since Liberation Day last April. What we are seeing is more intra-regional trade in Asia.

We see trade between North Asia and ASEAN, so North and South Asia, North Asia and India, intra-regional trade. We see more trade between the GCC and Asia, GCC and China. That trend seems to be continuing as well. And a lot more cooperation. So whether it’s like the Queen Bee programs to Singapore, Kwee Juan has been helping leading Queen Bee’s big MNCs bringing the SME or midsized companies as an ecosystem to hunt in the pack in other markets, that continues. And as people diversify their supply chains, Kwee Juan calls it international supply chains, I think we will see continued opportunities there in the long term. Kwee Juan, you want to supplement?

Kwee Juan Han: Yes. So I think on the AI piece, a lot of it is around the ecosystem financing. This is short-dated financing of 30 to 60 days for a lot of your suppliers into the ecosystem for AI. So as data centers get built out, you’re going to see them stuff up on other equipment. So we do see GPU as a service now becoming an area of interest for a lot of our customers. And also, at the same time, with the semiconductor, CapEx now also going up, because each of these servers require different kind of semiconductors, and that is something that we are seeing some level of activity. So all these are driven by the broader climate of data center and AI being the core for capability that people are building out too.

Edna Koh: Maybe we have time for one last question if anyone has. Okay, if not then I think we can draw this time a close. Thank you everyone for your time and we’ll see you next quarter. Thank you.