DBS is likely to continue prioritising system resilience whilst building up excess capital, provided it does not pursue additional acquisitions, according to Morningstar.
Singapore’s largest bank by assets is expected to focus on strengthening the stability of its existing digital infrastructure. This approach could slow the rollout of new services but is expected to reinforce operational efficiencies already achieved, said Kathy Chan, associate equity analyst at Morningstar.
DBS faced technology outages in March 2025 that prevented customers from accessing digital banking, ATM services, and payments through NETS, according to local reports. Earlier, in May 2023, a software issue disrupted its digital banking services for around six hours and also affected ATM operations.
The bank’s strong return on equity is expected to support continued growth in excess capital if further acquisitions are avoided, Chan noted. In recent years, DBS has acquired Lakshmi Vilas Bank, Citi’s Taiwan operations, and a 19.4% stake in Shenzhen Rural Commercial Bank.
Chan highlighted that DBS has historically managed acquisitions well, including integrating Société Générale’s Asian private banking business and ANZ’s retail and private wealth assets across five Asian markets. However, she added that a more balanced strategy between shareholder distributions and mergers and acquisitions would be preferable, rather than allocating most surplus capital toward further large-scale acquisitions.
Looking ahead to 2026, DBS is projected to deliver high single-digit growth in fee income, supported by rising wealth management fees driven by growth in assets under management and net new inflows. Nonetheless, the bank is expected to face margin pressure, with its net interest margin likely to decline by about two basis points for every quarter-point reduction in the federal funds rate. To counter this, DBS is directing excess deposits into high-quality liquid assets.
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