Highlights

• DBS delivered a record net profit of S$3,079m (+9% yoy) in 2Q26 due to a surge in wealth management fees (+42% yoy), which have a knock-on effect on treasury customer income (+42% yoy). Wealth AUM expanded 16% yoy to
  S$516b. 
   
• Asset quality was pristine with NPL formation muted at S$155m. DBS has ample management overlay of S$2.4b for general provisions . 
   
• DBS provides a 2026 dividend yield of 4.4% with potential for further capital management. Maintain BUY with a target price at S$80.00.

Analysis

• DBS Group Holdings (DBS) reported a record net profit of S$3,079m for 2Q26 (+9% yoy and +5% qoq), which was above our expectation of S$2,821m.
   
• Interest rate headwind mitigated by loan growth and proactive hedging. NIM narrowed 18bp yoy, but receded marginally by only 2bp qoq to 1.87% in 2Q26, mitigated by proactive hedging. On a constant currency basis, loan growth was robust at 8% yoy and 3% qoq. Thus, net interest income only suffered a mild decline of 2% yoy to S$3,581m.
   
• Wealth management boosted customer-driven fee income. Net fee income increased 25% yoy to S$1,460m in 2Q26. Wealth management fees
  surged 42% yoy in 2Q26, driven by healthy growth in investment product sales and bancassurance. Wealth AUM rose above the S$500b mark for the first time to S$516b (+16% yoy), underpinned by net new money of S$11b. Transaction services (+12% yoy) and investment banking (+29% yoy) also contributed to the broad-based fee growth.
   
• Treasury customer sales and markets trading delivered another strong quarter. Treasury customer income increased 42% yoy to S$924m in 2Q26, supported by flows from both wealth and corporate clients. Markets trading income rose 12% yoy to S$469m, benefitting from market volatility and lower funding costs. The strong performance highlighted DBS’ strong institutional and cross-border franchise.
   
• Cost discipline a key strength. Operating expenses grew only 3% yoy to S$2,347m in 2Q26 despite continued investments in technology, AI and franchise expansion. Cost-to-income ratio stayed low at 39%, among the most efficient levels in the regional banking sector.
   
• Asset quality remained resilient. Non-performing assets were broadly unchanged at S$4,764m as NPL formation was muted at S$155m in 2Q26. NPL ratio remained stable at 1.0%. Specific allowances were manageable at 16bp of loans in 2Q26 (1Q26: 14bp). There was a write-back in general provisions of S$75m. Management overlay for general provisions remained a sizeable S$2,400m. Loan-loss coverage was stable at 130%. DBS also maintained a strong CET-1 CAR of 14.6% on a fully phased-in basis.
   

• Handsome dividend payout. The Board declared an ordinary dividend of 66 S cents and a capital return dividend of 15 S cents for 2Q26, bringing total quarterly dividends to 81 S cents per share.