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By Yantoultra Ngui and Roushni Nair
SINGAPORE (Reuters) -Shares of DBS soared to a record high on Monday after Singapore's largest bank flagged an improvement in net interest income for 2025 and a dividend capital return plan, in line with a jump in fourth-quarter profit that met expectations.
Southeast Asia's largest bank by assets now expects 2025 group net interest income to slightly exceed last year's S$15.04 billion ($11.1 billion), an upgrade from its previous forecast of remaining at 2024 levels.
"While macroeconomic and geopolitical uncertainties persist, the franchise and digital transformations carried out over the past decade position us well to continue delivering healthy returns," DBS Chief Executive Officer Piyush Gupta said in a statement.
DBS's net interest margin, a key profitability gauge, rose to 2.15% during the quarter from 2.13% a year earlier.
DBS, the first Singapore lender to report earnings season, said October-December net profit climbed to S$2.62 billion ($1.9 billion) from S$2.39 billion a year earlier, driven by growth in its commercial book and markets trading.
This matches the mean estimate of nearly S$2.63 billion from five analysts, according to LSEG data.
DBS stock hit a record high of S$46.5 earlier in the day, driving the Straits Times Index to its highest level ever.
The benchmark outpaced a 0.4% slump in broader Asian markets that were affected by repeated warnings of imminent tariffs from U.S. President Donald Trump, including on steel and aluminium.
DBS declared a final dividend of 60 Singapore cents per share, versus 54 cents declared a year ago.
It said it planned to introduce a capital return dividend of 15 Singapore cents per share per quarter to be paid out over 2025, and expected to pay out a similar amount of capital either via this plan or other mechanisms in subsequent two years.
The 2025 capital return dividend plan on top of a S$3 billion buyback announced in the third quarter signaled DBS's commitment to shareholder return while striving for long-term growth, analysts said.
DBS will see a change in CEO in March and investors will be focusing on potential changes. Tan Su Shan, who previously headed up DBS' institutional banking group and is currently deputy CEO, will take over from Gupta, making her the first woman to lead the bank.
Singaporean banks were forecast to post stronger profits for the fourth quarter, but growth could take a hit this year as U.S. President Donald Trump's trade tariffs and other policies threaten to undermine the global economy, analysts said. Rival United Overseas Bank is next to report its financial results on Feb. 19.
($1 = 1.3563 Singapore dollars)
(Reporting by Yantoultra Ngui and Roushni Nair; Editing by Stephen Coates)
