09 Feb, 2026
Singapore's DBS expects falling rates to weigh on interest income
By John Wu and Yuvraj Singh
DBS Group Holdings Ltd. expects its interest income to slip further in 2026 amid falling interest rates, after the Singapore-headquartered lender posted a 10% year-over-year decline in its fourth-quarter 2025 net income.
Net interest income declined roughly 6% year over year to S$3.59 billion in the October–December 2025 period as lower interest rates dragged net interest margin (NIM) to 1.93%, compared with 2.15% in the same quarter a year ago, Southeast Asia's biggest lender by assets reported on Feb. 9.
"So we really had the perfect storm in 2025" in terms of interest rates, the strong Singapore dollar, and also tax rates, group CEO Tan Su Shan said during the call. The full-year impact of lower rates in 2026 could be mitigated by deposit growth, hedging opportunities, and non-interest income growth, Tan said. "The fourth quarter is normally quite seasonal. We are off to a strong start in 2026. January was very good indeed."
Net interest income in 2026 is expected to be slightly below 2025 levels, Tan said in a statement accompanying the earnings announcement. The assumption is based on the benchmark local interest rate at 1.25%, two rate cuts by the US Federal Reserve, and a stronger Singapore dollar, the CEO said.
Interest on floating loans charged by Singaporean lenders is usually determined by the Singapore overnight rate average (Sora), a local benchmark based on actual reported borrowing transactions in the unsecured overnight interbank cash market and is highly influenced by global rates and currency movements. The Monetary Authority of Singapore (MAS) does not have a policy interest rate and instead manages monetary policy by letting its currency rise or fall against a basket of currencies from the country's key trading partners within an undisclosed band.
The Sora ranged between 0.93% and 1.45% in January 2026, compared with 3.41% to 3.82% in the same month of 2024, according to data on the MAS website
Full-year 2025 net profit was S$11.03 billion, down by approximately 3% from 2024. While falling interest rates dragged on net interest income, which makes 69.4% of the total income, DBS said its earnings were supported by a record commercial book income, which includes incomes from interest, fee and treasury, and markets trading income.
The group's fixed-rate assets rose to roughly S$210 billion, plus a deposit inflow of S$64 billion, the highest in its history, the company said.
As of Feb. 6, US$1 was equivalent to S$1.27.