DBS reports 10% profit growth and unveils capital return dividend: Our Quick Take

DBS 4Q24 earnings and dividend highlights

DBS has announced its earnings for fourth quarter of 2024. Key highlights include:

• Q4 2024 profit: SGD 2.62 billion (+10% year-over-year)
• Full-year 2024 profit: SGD 11.4 billion (+11% year-over-year)
• Increased final dividend to 60 cents per share
• New quarterly Capital Return dividend of 15 cents per share announced for 2025

DBS reported a 10% year-over-year increase in net profit for the fourth quarter, totaling SGD 2.62 billion. 

This growth was driven by robust performance in both the commercial book and markets trading divisions. 

The annualised return on equity stood at a commendable 18.0%, matching the previous year's record.

Total income rose 10% year-over-year to SGD 5.51 billion, buoyed by a combination of higher net interest margin, increased fee income, and a rebound in markets trading income.

The bank's core lending activities saw a 5% rise in net interest income to SGD 3.83 billion in Q4, driven by a slight increase in net interest margin and growth in the balance sheet.

Fee income experienced significant growth, particularly in the areas of wealth management and card fees, due in part to the consolidation of Citi Taiwan. 

Wealth management fees alone rose by 41%, contributing substantially to DBS's record fee income performance.

The bank benefited from a 41% increase in other non-interest income, primarily due to higher treasury customer sales and gains from property disposals.

The bank's asset quality remains solid, with the non-performing loan (NPL) ratio holding steady at 1.1%. 

The board proposed a final dividend of 60 cents per share, a six-cent increase from last year's payout, translating to a full-year dividend of SGD 2.22 per share—a 27% increase over the previous year.

Find out how much dividends you would have received as a shareholder of DBS with the calculator below. 

DBS has unveiled an innovative 'Capital Return' dividend, set at 15 cents per share quarterly for the duration of 2025. 

In the subsequent two years, it expects to pay out a similar amount of capital either through this or other mechanisms, barring unforeseen circumstances

The Capital Return dividend is the latest in a series of capital management initiatives undertaken by the Board in recent years, which included regular increases in the ordinary dividend including through a bonus issue, occasional special dividends and a share buyback programme which was announce earlier. 

DBS maintained its expectation for 2025 pre-tax profit to be around 2024 levels. 

However, group net interest income is now expected to be slightly above 2024 levels based on two rate cuts in 2H25, with loan growth helping to offset a slight decline in the group net interest margin

DBS maintained its net profit for 2025 to be lower than 2024 due to a global minimum tax of 15%.

Beansprout’s Quick Take on DBS earnings

The strong earnings and dividend hike reported are likely to be taken positively by investors.

Notably, the strong growth in wealth management fee income should help to allay concerns about the potential impact of interest rate cuts putting pressure on DBS’ net interest margin and profit.

In addition, the capital return dividend announced may provide support to DBS’ share price. 

Based on the total dividend per share of S$2.22 in FY2024, DBS currently offers a dividend yield of 4.7% based on its closing price of S$44.68 on 7 Feb. 

Adding the capital return dividend of S$0.15 per quarter for FY2025 to annualised full year dividend of S$2.40 would imply a potential total dividend per share of S$3.00. This would imply a potential dividend yield of 6.7%. 

This would be above DBS’ historical average dividend yield and UOB’s dividend yield of 4.7%, and OCBC’s dividend yield of 5.1%. 

DBS currently trades at a price-to-book valuation of 2.0x, above its historical average of 1.2x. 

Related links:

• DBS share price and share price target
• DBS dividend forecast and dividend history

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