DBS delivered a better-than-consensus 1Q25 result, but management has also taken the prudent move to increase its allowances in 1Q25.
1Q25 net earnings of S$2,897m is down 2% y-o-y , but higher than Bloomberg consensus expectations of S$2,840m.
As expected, higher allowances in 1Q25 due to an uncertain outlook and potentially slower economic growth.
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Allowances for credit and other losses went up from S$135m in 1Q24 to S$325m in 1Q25, largely reflecting the current prudent stance in view of the trade tariff situation.
Muted guidance.
DBS management is guiding for FY25 net profit to be lower than FY24, largely impacted by the global minimum tax.
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Cost-to-income ratio is estimated to come in at the 40% range.
Management is positioning DBS for more intra-regional trades in view of the current US-China tariff situation.
What changed?
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Above is an excerpt from a report by OCBC Investment Research. Clients of OCBC Securities may be the first to access the full PDF report @ https://www.iocbc.com/.
