DBS Group reported a 10% drop in fourth-quarter net profit to S$2.36 billion, falling short of market expectations. Southeast Asia's largest bank by assets missed Reuters/LSEG estimates of S$2.55 billion as lower interest rates squeezed margins across its lending operations.

The bank's net interest margin narrowed by 22 basis points to 1.93%, while net interest income declined 4% year-on-year to S$3.59 billion. These figures reflect the challenging operating environment facing Singaporean banks as monetary policy accommodated tighter.

DBS found some bright spots in commercial book net fee income, which rose 14% to S$1.10 billion, driven by strong wealth management performance. The bank also declared a final dividend of 66 cents, up from 60 cents a year ago, returning capital to shareholders despite the profit squeeze.

DBS expects total income in 2026 to remain around 2025 levels, with net interest income and net profit slightly below the previous year. This outlook follows the Monetary Authority of Singapore's policy easing in early 2025, which reduced lending margins across the banking sector.

Quick Fact: DBS's net interest margin fell to 1.93% in Q4.