SINGAPORE: OCBC Investment Research (OIR) analyst Carmen Lee raised her target price for DBS to S$50 after the bank posted an S$11.4 billion net profit for FY2024, an 11 per cent increase from the previous fiscal year, in line with expectations.
DBS, Singapore’s largest bank, saw a “healthy” 10 per cent year-on-year (YoY) increase in its fourth-quarter earnings, driven by non-trade corporate loan growth and lower deposit costs from rate cuts and current account savings account (CASA) inflows.
The bank announced a final dividend of 60 Singapore cents per share, up from 54 cents last year, to be paid on April 16, 2025. Total dividends for the year rose 27 per cent to S$2.22 per share.
The ex-dividend date is April 7, which means investors must buy the stock before then to receive the payout. At a share price of S$44.68, the dividend yield stands at 5.0 per cent.
DBS also announced plans to introduce a capital return dividend of 15 cents per share per quarter for FY2025. Similar payouts are expected over the next two years, either through capital return dividend or other measures.
This brings the estimated total dividend per share for FY2025 to S$3.00, resulting in an estimated dividend yield of 6.7 per cent.
To recognise staff contributions to the bank’s record performance, DBS announced on Feb 10 that it has set aside S$32 million to give a S$1,000 bonus to each of its staff, except senior managers.
According to OCBC Investment Research, DBS’ S$3 billion share buyback programme, capital return, and higher dividends are expected to support its share price. Management projected a slight increase in net interest income for 2025, assuming two rate cuts in the second half of the year.
Wealth management income is expected to rise with more cross-selling and higher-value products. The cost-income ratio is forecast to stay in the low-40 per cent range, while pre-tax profit is expected to remain around 2024 levels. However, net profit may be lower due to the 15 per cent global minimum tax.
According to Ms Lee, “The external environment remains challenging with more tariffs and likely policy changes at the major economies. However, we believe that Asia is likely to be more resilient compared to other regions.”
“With the 6.7 per cent dividend yield, we believe DBS remains attractive for high yield seeking investors. We are raising our DBS fair value estimate from S$43.60 to S$50.00, giving a still attractive dividend yield of 6.0%,” she added. /TISG
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