The share price of DBS Group Holdings Limited (SGX: D05), or DBS, has surged by over 40% over the past year.
With the share price near all-time highs at roughly S$57, the main question investors are asking is if they have missed the rally.
We examine the bank’s latest results and whether DBS is still a compelling pick even at lofty highs.
Why DBS Is Often Called One of the World’s Safest Banks
DBS is the ultimate “sleep well at night” bank stock for most investors, for good reason.
The bank is conservatively run, with a strong capital position: its common equity tier 1 (CET1) ratio of 15%, on a more stringent fully phased-in basis, is comfortably above regulatory requirements.
When you add the fact that DBS has consistently been profitable despite market cycles, you can see why its stability stands out.
Recent Performance Snapshot
As highlighted earlier, the bank’s stock price is trading near record highs, with a 52-week range between S$39.71 and S$60.
In its recent results for 2025 (FY2025), DBS’s net interest income (NII) was generally stable at S$14.5 billion.
Despite net interest margin (NIM) contracting from 2.13% in FY2024 to 2.01%, DBS managed to cushion the impact with proactive hedging and growth in deposits.
The bank’s cost-to-income also held steady at 40%, allowing the bank to post a return on equity (ROE) of 16.2%.
The balance sheet remains solid, with a non-performing loan (NPL) ratio of just 1.0%.
As mentioned before, DBS has a strong CET1 ratio of 15.0%, which is much higher than the regulatory requirement of 6.5%.
DBS’s total dividend for FY2025 was S$3.06 per share, which gives the bank a trailing dividend yield of 5.3%.
Why the Rally Is Fundamentally Supported
DBS’s strong rally is on the back of its robust fundamentals.
Net profit was resilient despite the backdrop of declining interest rates, with FY2025’s net profit of S$11.0 billion, a slight decline from FY2024’s S$11.4 billion.
Encouragingly, DBS continues to record healthy loan activity, up 6% in FY2025, with broad-based growth across its corporate and wealth management divisions.
The powerhouse bank also started paying a capital return dividend in FY2025 (S$0.60 per share), which contributed to its attraction amongst investors.
What Could Drive Further Upside Into 2026
Looking into 2026 and beyond, DBS’s growth prospects look promising, especially if the bank can continue the recent momentum seen in its wealth management business.
With the Middle Eastern conflict leading to capital flows from wealth clients in the region into Singapore, DBS is poised to benefit, given its strong wealth management business.
Another shot in the arm for the wealth management business is DBS’s recent expansion in Greater China.
Even if interest rates continue to decline, DBS has already shown that its cost discipline and strong performance in its non-interest income segment can help offset any NIM compression.
Finally, given the bank’s friendly shareholder return policy, any incremental earnings are likely to be returned to shareholders via increased dividends and buybacks.
Key Risks Investors Should Watch
Some key risks to monitor for DBS would be the further compression of its NIM, which would pressure its NII.
An economic downturn could also see the bank’s loan book deteriorate and reduce its earnings.
Finally, the current valuation of DBS suggests the market may have already priced all these growth opportunities into the share price.
Valuation: Expensive or Still Reasonable?
DBS is currently priced for perfection, trading at 2.36x book and 15.0x earnings, a significant premium over the five-year historical averages of 1.52x and 11.62x, respectively.
However, there’s an argument to be made that since DBS has grown more profitable, with a current ROE of 16.2% compared to the five-year average of 13.9%, this premium valuation can be justified.
The current dividend yield of 5.3% is also comfortably higher than the five-year average of 4%.
At first glance, DBS’s current valuation is stretched.
But given its stability, increased profitability and higher dividend yield, this premium could be reasonable.
Get Smart: Solid Fundamentals, Still a Portfolio Staple
In sum, despite the ferocious rally seen in its share price, DBS’s strong fundamentals still merit a place in an investor’s portfolio.
Its solid combination of income, growth and stability makes this blue chip a core holding for dividend investors.
The best days could still be ahead for this bank.
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Disclosure: Wilson.H does not own shares in any of the companies mentioned.
