Singapore bank DBS forecasts profit growth in 2025 after Trump returns

Yantultra Ngui

SINGAPORE (Reuters) – Leading Singapore bank DBS sees the potential for its profits to rise in 2025 when Donald Trump takes office as U.S. president next year as his policies could lead to fewer interest rate cuts from the Federal Reserve, leading to more high net interest margin, which is a key factor. profitability indicator.

The new Trump administration is expected to adopt stricter immigration policies and impose more tariffs that could boost inflation as well as increase deficit spending, DBS CEO Piyush Gupta said at a briefing after the bank’s quarterly results on Thursday.

“If this is the case, then it is possible that the Fed’s monetary policy could remain tighter than currently projected,” he added. “I think the higher interest rate environment is generally better for DBS.”

However, Gupta said DBS, which has operations across the region from Singapore to China, must be wary of legal and regulatory risks under the Trump administration.

DBS, Southeast Asia’s largest bank, posted record third-quarter net profit on Thursday but forecast 2025 net profit to be below 2024 levels as the city-state introduces a global minimum corporate tax rate.

DBS shares rose 6.9% to a record S$41.87 on Thursday morning. Shares of local rivals Oversea-Chinese Banking Corporation and United Overseas Bank, which are due to report quarterly results on Friday, also rose 3.5% and 2.3%, respectively.

The local benchmark stock index rose 1.8%.

DBS, the first Singaporean lender to report third-quarter results, said its July-September net profit rose 15% to S$3.03 billion ($2.27 billion), easily beating five analysts’ average estimate of nearly 2 .80 billion Singapore dollars, according to LSEG. .

It also topped the previous quarterly record of S$2.96 billion set in the first quarter of 2024, although its year-on-year net interest margin fell to 2.11% in the third quarter from 2.19%.

The strong results were driven by record fee income driven by asset management, growth in sales to treasury clients and increased trading income in the markets.

Nine-month net profit rose 11% to a record S$8.79 billion, while return on equity rose year-on-year to 18.8% from 18.6%.

Singapore’s banks have benefited in recent years from higher global interest rates and a strong influx of wealth driven by the city-state’s political stability.

But rate cuts by major central banks and volatile markets due to global geopolitical and economic uncertainty will curb their pace of growth, analysts say.