DBS – little margin for error

🔻Yesterday, $DBS(D05.SI)$ fell as much as 2.2% to $58.18 after announcing its 4Q results before market. The stock is down another 0.9% this morning to $57.67 as of 910AM – its lowest price level in 3 weeks

📢The company's 4Q results had missed analysts expectations by around 10%, led by softer non-Interest Income and higher provision allowance

🛣Looking ahead, the bank provided guidance toward an almost flat revenue for FY2026 compared to FY2025

✍Yesterday evening, Macquarie Research (MQ) released a research report on DBS reiterating their Underperform rating and their latest target price revision

🙅‍♂️MQ believes that while a high dividend yield and further share buyback could underpin the share price support, the subdued earnings outlook leaves little room for a consensus upgrade

Read more for the full article containing excerpts of MQ’s 9 January 2026 report and important disclaimers:

Key points

• DBS's 4Q25 results missed by around 10%, led by softer Non-Interest Income and higher provision allowance

• The bank is guiding for flat revenues in FY26 and slightly lower earnings. Capital return dividends remain in place for FY26-27

• A high dividend yield underpins the shares, but MQ maintains Underperform due to subdued earnings outlook and limited scope for consensus upgrades

4Q25 earnings missed. Lower-than-expected Non Interest Income and a higher provision expense, owing to DBS's commercial real-estate exposure, drove a 10% earnings miss relative to Visible Alpha consensus. MQ had viewed 4Q25 consensus expectations as leaving little margin of safety, and alongside DBS's premium valuation, MQ sees limited room for further re-rating

2026 guidance - expecting a volatile year. The bank's guidance is for almost flat total revenue vs FY25 (slightly lower Net Interest Income, high-single-digit Non-Net interest income with wealth fees up mid-teens), cost/income low-40%, 17-20bps specific provisions offset by general provision write-backs, and NPAT slightly below FY25. The dividend step up of +24c (ordinary) and 60c capital return (unchanged) remain for FY26

China CRE, Indonesia in focus. DBS has S$12 billion (equivalent) in China Commercial Real-Estate exposure, of which S$1 billion is to private enterprise. The downgrade this quarter was less than S$500 million. On Indonesia, DBS is confident in its corporate exposure and does not do wealth margin financing

Net Interest Income remains the key. DBS's strong wealth performance is known, and asset quality as well as trading assumptions have little room for consensus upgrades. DBS's 1.25% average SORA assumption is well above the market (1.14% SORA-3m currently); each 1b lower SGD rate drives S$10m lower revenues, all else equal. MQ’s model assumes 1.10% average SORA-3month, with a recovery only possible in 4Q26, assuming a US Fed rate hike

Earnings changes: Factoring in the results, MQ lowers their 2026-2027 earnings per share by 2-4% and introduce 2028 earnings per share at S$4.15/share

Valuation: MQ reduces their 12-month target price by 3% from $50.00 to $48.67, based on a Price-to-Book stock methodology.

Catalysts: Net interest margins / net interest income pressure this year in upcoming quarters. Further deployment of the S$3 billion buyback (12% utilised) could support the shares

Note: Macquarie Research is independent from the Warrants business, what the Macquarie Warrants desks quote from Macquarie Research may not reflect the complete analysis of Macquarie Research on the relevant company over time

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Macquarie has both trending call and put warrants on tight spreads and high liquidity tracking DBS. Investors keen to capitalise on the volatility of DBS shares may wish to consider using them to do so.

Interested investors can use the Exposure Simulator tool to estimate the warrant price performance of any of the warrants based on your target exit levels in the stocks.

Trending DBS call FQCW: https://warrants.com.sg/tools/exposuresimulator/FQCW

Trending DBS put RBFW: https://warrants.com.sg/tools/exposuresimulator/RBFW

With DBS shares down 2.7% over the past two days since its results announcement, trending DBS call $DBS MB eCW260730(FQCW.SI)$ is 24.4% lower to SGD 0.062 while trending put warrant $DBS MB ePW260630(RBFW.SI)$ has increased 28.1% to SGD 0.073.

​​​​​​​The examples show how warrants move in greater magnitude than the underlying share, providing a geared effect. The put warrant also shows how an investor can hedge against the short-term price drop, making gains on share price pullbacks.These are some of the top reasons why warrant investors will consider using warrants to trade the share price moves of an underlying in the short-term.