- Wealth management fees reached a record S$907 million
- Q1 net profit climbed to S$2.93 bln vs S$2.83 bln estimate
- Bank's exposure to Middle East remains limited, watching out for second-order impact
SINGAPORE, April 30 (Reuters) - Singapore's biggest bank DBS Group struck a more sanguine tone on its 2026 outlook on Thursday after beating first-quarter earnings forecasts, betting stronger wealth inflows and deposit growth can blunt the impact of the Iran war.
DBS, which is also Southeast Asia's largest bank by assets, ditched its earlier guidance for net profit this year to be slightly below 2025 levels. It did not provide an update on the potential for general provision write-backs as it announced its results.
"Things may still pan out, but as far as we can see, it's actually turned slightly more positive than the last guidance," chief financial officer Chng Sok Hui said during the quarterly earnings call. "We have a good shot, I think, at getting close to 2025 levels," she said.
CEO Tan Su Shan, while noting a precarious economic environment and volatile markets, said: "We feel good about the fundamentals."
The two-month conflict in the Middle East has injected volatility into markets and disrupted global supply chains, complicating the outlook for rates and inflation and making the world's biggest lenders wary of a severe economic downturn.
However, the impact to DBS's bottom line in the first quarter was mitigated by growth in its wealth segment.
Wealth management fees reached a record S$907 million in the first quarter driven by higher investment product sales and bancassurance, while net new money flows totalled S$10 billion.
"There is a rapid growth of wealth within Asia, and we are also still seeing wealth flowing into Asia," said Shee Tse Koon, group head of consumer banking and wealth management at DBS.
"We are certainly still in a growth mode... we're still hiring on all fronts," he said, referring to the bank's affluent, private client and private banking segments.
IRAN WAR FALLOUT
Shares of DBS closed 3.4% higher at S$58.50 on Thursday, after earlier climbing as much as 4.3% to a more than two-month high.
DBS reported a 1% year-on-year rise in net profit to S$2.93 billion ($2.29 billion) for the January-March period, ahead of the S$2.83 billion mean estimate from three analysts, according to LSEG data.
Still, CGS International analysts Tay Wee Kuang and Lim Siew Khee maintained a "hold" rating and S$60 target price on the bank's stock, warning that an extended Middle East crisis could lead to higher credit costs.
In the earnings call, Tan said the bank's exposure to the Middle East was "very limited", largely confined to highly rated sovereign wealth funds and state-owned assets.
"The first-order impact is really quite muted. The second-order impact is what we are more focused on," Tan said, referring to, among other things, supply chain disruptions - which she said could last one or two quarters.
DBS is the first Singapore bank to report quarterly earnings, with smaller rivals United Overseas Bank and Oversea-Chinese Banking Corp due to present their results on May 7 and May 8, respectively.
($1 = 1.2803 Singapore dollars)
Reporting by Rae Wee and Yantoultra Ngui; Editing by Chris Reese, Shri Navaratnam and Tomasz Janowski
Source: Reuters