Analysts cut DBS target price on lower 2027 earnings, but see buying opportunity after share price slide
The revisions follow similar cuts to UOB’s target prices after its results earlier this week
[SINGAPORE] Several analysts have cut their target price on DBS after the bank’s third quarter results, as they lowered their estimates of the lender’s earnings going forward.
The revisions follow the bank’s more cautious outlook and guidance for 2027, although analysts noted that the bank’s underlying performance remains resilient, while its recent price weakness has made it an attractive entry point.
Citi cut its target price on DBS to S$80.30 from S$86.60; CGS International reduced to S$78.90 from S$79.50; and Maybank Investment Banking Group lowered to S$80.52 from S$85.86.
Jefferies also cut its target price on DBS to S$88 from S$91; Macquarie reduced to S$76.40 from S$79.84 and RHB lowered to S$80.30 from S$81.20.
The cuts followed a similar reduction to UOB’s target price by several analysts, as shrinking lending margins and rising operating costs are projected to pressure earnings in 2027.
On Thursday (Nov 5), DBS posted a 5 per cent fall in Q3 net profit to S$2.81 billion, largely due to weak markets trading income from unfavourable market conditions.
It then guided for 2027’s total income to grow in the mid-single-digit range, with net interest income growth in the mid-single digits, and non-interest income growth in the double digits or high-single digits, depending on market performance.
Citi analyst Tan Yong Hong noted that DBS’ 2027 guidance pointed to a 2 per cent downgrade to its earnings per share from market expectations.
Macquarie head of Asean equity research Jayden Vantarakis also said that DBS’ guidance for next year “appears cautious”, noting that the bank cited market volatility clouding the outlook.
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Nevertheless, the bank’s recent share price correction presents a good buying opportunity into a franchise that offers resilient earnings and capital returns, said Jefferies equity analysts Joanna Cheah and Ang Wei Han.
DBS’ shares are down more than 12 per cent from its peak of S$79.05 in September, after a correction in Singapore bank shares amid concerns of narrowing margins, greater competition for deposits and heightened risks.
While its Q3 net profit was down, the trading weakness masked robust net interest income, record wealth inflows and fees, benign asset quality and strong capital returns, said the Jefferies analysts, who have a “buy” call on the counter.
Net interest income – which rose 4 per cent to S$3.71 billion in Q3 – had defied rates headwind where the nine-month Singapore Overnight Rate Average rate halved on year, they noted.
In fact, OCBC head of equity research Carmen Lee upgraded her call on the counter to “buy” from “hold” due to its current price weakness. She kept her fair value estimate of S$78 unchanged.
She said: “With the strong Singdollar outlook, DBS remains a good proxy to the Singapore economy and a core holding in any Singdollar portfolio.”
While geopolitical tensions and global uncertainties will remain for the rest of 2026, the recent correction was healthy and offers opportunities to accumulate near the current price level, she added.
Meanwhile, DBS has only used S$400 billion of its planned S$3 billion share buyback mandate, creating further opportunities for capital returns ahead, said Thilan Wickramasinghe, Maybank’s head of Singapore research and regional head of financials.
Furthermore, he expects the bank’s deployment of agentic artificial intelligence at scale to drive new opportunities – enabling customers with in-house agents could increase stickiness and lower churn, while productivity enhancement should keep operating expenditure in check and deliver upside to income.
DBS shares were down 2.5 per cent or S$1.77 at S$69.43 as at 2.50 pm on Friday.
