Singapore's DBS expects yearly earnings to beat $7.5 billion in medium term

FILE PHOTO: Singapore bank DBS Q1 profit jumps 43% to new high, beats estimates

By Navya Mittal and Yantoultra Ngui

(Reuters) - Singapore's biggest bank DBS Group on Monday said it expects to lift annual earnings to more than S$10 billion ($7.55 billion) within the next three to five years, after it posted a record first-quarter profit earlier this month.

DBS, which is also Southeast Asia's largest lender by assets, premised the projection on its digital transformation and its strong balance sheet and capital, among other factors, it said at an investor day presentation.

The forecast is 22% higher than the S$8.19 billion annual net profit it achieved in 2022.

Singaporean banks have been benefiting from inflows from depositors seeking a safe haven from turmoil in the global banking system and uncertainty over the world economy and geopolitics.

DBS also expects a return on equity (ROE) of between 15% and 17% in the medium term and for its common equity tier one ratio, a measure of a bank's resilience, to be in a range of 12.5% to 13.5%, according to the presentation slides.

Its ROE was 15% last year, while its CET1 ratio was 14.6%, according to its 2022 annual report.

DBS said faster growth in capital-light high-ROE businesses such as wealth management, global transaction services and treasury market sales will help it achieves its goals.

It is also looking for growth in markets such as India, Indonesia and Taiwan.

DBS aims to be among the top 10 private sector banks in India, projecting net profit to triple to around S$375 million by 2026, according to the slides.

The bank also sees room for higher distributions, such as via dividends or buybacks, with the pace dependent on business conditions and the macroeconomic outlook.

($1 = 1.3245 Singapore dollars)

(Reporting by Navya Mittal in Bengaluru and Yantoultra Ngui in Singapore; Editing by Sonia Cheema and Jan Harvey)