Okay. Good morning, everybody, and welcome to this morning's media briefing. As you may have seen, apart from the 3Q financial results, we also announced this morning that Peter Seah, our chairman, will be retiring at the end of the year. Anthony Lim, who is currently a member of the board, will succeed him as chairman January 1st , 2027. So, we will conduct today's briefing in two parts. The first part will focus on the chairman succession, and we have Chairman Anthony and Su Shan here in the room with us. The three of them will make some remarks, and then after that, we will go into Q&A for this part of the briefing. Without further ado, Su Shan , over to you.
Thank you. Allow me to kick off today's press briefing. Firstly, to really to thank Mr. Peter Seah, our esteemed chairman, and he's been serving with great distinction for the past 16 years. Of course, to also to introduce Anthony, no stranger to any of us. He's been a board member, and he will be assuming the chairmanship as of the 1st of Jan, 2027. As we prepare for this transition, I thought it was timely for us to reflect on Peter's many contributions to DBS. We don't have a lot of time, so I'm going to distill it to three short points. The first point really speaks to the culture of DBS, our culture and values.
It's been said that culture eats strategy for breakfast, and it is Peter's distinctive leadership around shaping the culture of DBS, around making us remember that POSB is indeed something that we need to champion, it's something we need to value. The ethos around POSB is neighbors first, bankers second. It speaks to the strong franchise we have as we celebrate POSB's 150th birthday on the 1st of Jan, 2027, just a month and a half away. So it's this culture that Peter has set, and he's been able to shape this by combining both purpose with customer obsession, combining both innovation with responsibility, and ambition with humility. So Peter's always been saying, when to go fast, when to slow down, when to take the big bets, when to go more careful.
It's this blend of nuance and wisdom and understanding that has helped us to create this strategic moat. This cultural moat, which takes years to build, cannot be replicated. This is probably, Peter, your biggest legacy to all of us at DBS, for which we thank you profoundly. The second really is his leadership at a time of tremendous change for DBS. We were going from being pretty analog and very slow to building one of the world's best digital banks. Peter and, of course, Piyush, my predecessor, my former boss, and our CEO, the combination of Peter and Piyush, the board and the GMC, really led to both the formation, but also the transformation and the ultimate execution of DBS as a transformative, innovative digital bank.
This is crucial because that built the foundation that we have today for us to now build a best AI-enabled bank with a heart. I remember, Peter, when we first embarked on this many years ago, 12- 13 years ago, on this journey, at a board meeting, you just said, "Come on, guys. Let's just do it," right? "Let's get up and let's just do it." You gave us the confidence to have ambition, the confidence to build not just the best bank in Asia, but the best digital bank in the world, and the confidence also to fail, to fail fast, and to move forward and not to dwell too much on small failures, but to learn from them.
Your response, your conviction, your ability to make bold decisions, to make hard decisions also, went through many difficult times together, all that really put us in good stead as we navigate the years ahead, which will be challenging, and a lot of changes. Nonetheless, I think we rest on a very strong foundation. Last but not least, and really important for everyone to understand, is how Peter has shaped a great and distinctive board and management partnership. Beyond your strategic insights, really, your ability to connect with people, to make those people judgment, to build trust with different segments of our stakeholders, and to bring different perspectives, diverse views to the table, and yet to make a decision and to move on. I'm a beneficiary.
I think my management team and I benefit from this openness, candor, and mutual respect that the board and senior management has. Both Anthony and I look forward to continuing that legacy that he has built. Finally, I would like to also just read out something, a letter that was sent from Temasek's chairman, Mr. Teo Chee Hean, and Temasek CEO, Mr. Dilhan Pillay. I received the letter on behalf of the board yesterday, and Temasek wishes to recognize their appreciation for Peter, both for his contributions to DBS, but also to Temasek. I'll take two brief paragraphs from the letter.
It says, "Peter's stewardship and leadership traits set the tone from the top, fostering a culture in which integrity, excellence, innovation, teamwork, purpose, and performance were held in equal regard." He has built a board that asks the hard questions and has cultivated a relationship with management grounded in trust and candor. His 15-year extraordinary partnership with Piyush exemplified how a chairman and a CEO can bring out the best in each other and in the institution they lead, and serves as a beacon for other companies in the Temasek stable. Good chairmanship is often not immediately visible and oftentimes underappreciated. It is reflected in the quality of decisions made, the difficult moments navigated, the leaders developed, and the culture sustained. A good chairman knows how to play a leading role and how to play a supporting role.
Peter's prior experience as a successful CEO has played a key part in knowing where that line is. As a result, his contribution to DBS has been both profound and enduring. He leaves the bank well-positioned for its next chapter, with strong leadership and firm foundations. Temasek and all our fellow shareholders in DBS have much to be grateful to Peter for." Peter, thank you so much for your wisdom, your guidance, for me personally, for your incredible mentorship and guidance, and of course, your unwavering commitment to DBS. Your leadership has left an indelible mark on all of us. Thank you. Next, I would like to welcome Mr. Anthony Lim. He is going to be our new chairman from the 1st of January 2027.
No stranger to DBS, Anthony has served on the board with great distinction over the last six years, and over this time, he has always brought very thoughtful comments, very invaluable perspectives on a wide range of issues, including geopolitics, risk management, markets, leadership, and talent development. I personally have seen Anthony's deep markets experience firsthand. We've had very volatile markets the last two years, particularly the last year. During the unprecedented rate volatility, he was the person that we all leaned towards for advice on hedging, advice on how to frame the arguments, and including, I would have to add, his incredible network in the U.S. and in Europe and in Asia. He brings all this incredible network of relationships to us and to the bank as we have to navigate the choppier environment going forward. Anthony, thank you.
We look forward to navigating and working closely with you. My leadership team and I look forward to continue to build upon our strong foundations and to strengthen our position to build the best AI-enabled bank with a heart. Thank you.
Thank you, Su Shan. Chairman, I pass this time over to you to also make some remarks.
Well, thank you for your very generous, kind words, Su Shan. Particularly, I want to thank Temasek chairman and CEO for that very generous letter of compliments. I am not sure I deserve it. I will accept it anyway. DBS is a very key institution in Singapore's history. DBS started off as Development Bank of Singapore, which was very key to Singapore's industrialization program. That is one. In acquiring POSB, DBS took on the role of the people's bank. To me, these are very two key hallmarks of DBS that has to preserve. DBS must continue to support business Singapore, and of course, its own expansion in the region, and continue to play a very key role, because as the people's bank, it touch every family in the country. If I look back at the last 16 years, it is really been a fabulous, wonderful journey.
Time flies because I found the engagement of DBS extremely interesting, challenging. When I took over in 2010, we had just come out of the global financial crisis, and I felt that we really need to transform and restructure DBS, not only to handle the business of the day, but to properly position itself for the future. One of the things that the board with management debated was that we should really preparing the bank for a digital world. That really launched DBS on a very challenging, interesting, and ultimately successful journey in being a very well-digitized bank. Of course, looking at this business franchise, not just in Singapore, but in the region, we took a very aggressive strategy in Hong Kong and China.
At a time when there were questions asked, but the board and management had the courage to say, "I think we are doing the right thing." If you look at our Hong Kong China performance today, you will see that its profits actually gone up six times over the period. To me, what is most important is building the talent pool. Every country, every company needs a strong talent pool to be able to do well. A talent pool build-up requires combined effort of the board leading the effort, establishing the culture, and management working with it and responding to it. I would say that one of my proudest things about DBS is I believe we have a very strong talent pool and succession program. Probably one of the best examples of the successful build-up of talent pool and succession is sitting next to me.
Su Shan proved herself, and we went through a lot of effort to actually develop her. Of course, not just us, with others. Su Shan emerged as the best candidate, and at that time, I said the board unanimously endorsed her. I think when Su Shan mentioned culture, that is the key. We have a culture of board and management working together in partnership. Ultimate accountability will always rest with the board. When the board stands together with management in its strategies, what it does, makes the organization so much stronger. It makes it easier for us to move. I have always told management, if we do things, we make mistakes, we share the accountability, because the board has to approve the policies. I would say that, to round it up, that it is been a very
I also thank Temasek, our largest shareholder, for the confidence they placed on me and my board and management, to allow us to grow at a phenomenal pace. I stayed on after Piyush retired, to really give some time for Su Shan and her team to settle in. And I must say, maybe biased as a chairman, that Su Shan has done outstandingly well in leading the team. And I am very confident that she will lead the team very successfully into a new lap. I will bet not an easy lap because we are moving into very messy geopolitics and AI. But I have confidence that with the talent pool and the team spirit of DBS, we will prevail and do well. Therefore, I thought it is timely, it has been two years after she became CEO, to step back and eventually take over.
Anthony has been with us for six years. Anthony has been on the board ExCo. Anthony has been deeply involved in our talent management as chairman of the, well, other organizations call it, we call it a CMDC, but basically the committee that looks at not just remuneration, but talent management. Of course, Anthony sits on other committees on the board. And the board, when I raised the proposal to have Anthony succeed me, the board unanimously agreed to the appointment. And the board shared the same view with me that, with Anthony at the helm as chairman, and with Su Shan , we will have another outstanding good run going forward. On those remarks, maybe I should invite Anthony to say something.
Oh, thank you, Peter. I will not dwell on the same comments about Peter's accomplishments. I think we all know what they are, and we are deeply grateful, and I echo every single comment that Su Shan has made in this context. Perhaps I would like to share a more personal experience with Peter. I am acutely aware that I am not a neutral observer here. I am honored by having this opportunity to succeed Peter as chairman of an institution like DBS.
It fills me with pride, but at the same time, I have to be honest, with a bit of, it is quite daunting to follow in the footsteps of such an accomplished leader. I first met Peter in the early 1980s when he was already a seasoned, well-accomplished banker and one of the most senior executives at OUB Bank. I was, at that time, a junior officer at MAS.
Through the years, his presence on the GIC board and since my own time on the DBS board has given me a special closer vantage point from which to learn some of his leadership skills. What I would say strikes me most, firstly, is what Peter does not do. Despite his status and his multiple accomplishments, he does not need to arrive at a meeting needing to be the loudest voice, nor its most persistent.
He does not arrive at an event needing to announce his status as chairman or one of the most senior people in the room. He does not draw a meeting to its conclusion before he has allowed the meeting to find its own conclusion, and if he disagrees with it, he skillfully steers the discussion towards a conclusion which he believes, and it is adopted by the board to be in the best interest of the company.
I think he's a reminder that perhaps the more effective form of leadership is one that is more restrained and with a lot of humility. Beyond that, I think Peter's effectiveness and his ability to achieve what he has done comes from the fact that he has a very clear understanding of the purpose. His acute sense of DBS's place in Singapore, as articulated earlier by him, and our mission to serve all our customers well, is a sign of his deep, deep understanding of DBS's history in the context of our country. We have arrived here, a bank with a human heart for our customers, powered by the capabilities unleashed by AI. We are not a bank that chases technology for its own sake, but one that harnesses the capabilities unleashed by AI to serve our customers better, to make banking more accessible, safer, and more human.
The challenge of balancing profits against conscience, performance against purpose, is the challenge that we owe to Peter if we are to do him justice in inheriting this legacy that he will leave us. Beyond DBS, Peter's contributions to the broader Singapore society has also left indelible mark on me. His pride in being a Singapore citizen and his willingness to contribute has seen organizations, committees, as diverse as the Council of Presidential Advisers, the boards of GIC, National Wages Council, the LASALLE College of the Arts, they have all benefited and continue to benefit from his wisdom and his leadership. Singapore has recognized him in kind with the Order of Nila Utama with distinction, one of the highest awards that the nation bestows on people who have served the nation well.
He has never been a public servant, but in many ways, he's the model of the servant who has served the public. The board of a great institution is not a passive audience. It sets direction, holds the line on values, and makes those decisions that management cannot make for itself. The challenges confronting boards today demand that we be more agile, more forward-looking, be willing to take on conventional thinking while remaining anchored to enduring principles, sound governance, prudent risk management, long-term stewardship, and a strong sense of purpose. These are principles that Peter has lived, not merely spoken about. In their letter of appreciation, which Su Shan quoted earlier from, Temasek remarked that good chairmanship is often not immediately visible and oftentimes underappreciated. By that standard, Peter, you have been very nearly impossible to see, and yet here we are.
The evidence of your work all around us, a great bank, a phenomenal management team, a proud institution. I do not take lightly what you are passing on. I intend to honor it, build upon it, and in time, pass it on with the same spirit with which you have passed to me. Thank you, Peter.
Thank you, Anthony. With that, I think we will open the floor for questions from the media. For this segment, we are only going to be taking questions related to the chairman succession. If you have got any questions related to the Q3 results, I ask that you hold that to the second part of the briefing. If you have got any questions, please press the raise hand button in Webex, and then we will call upon you. When we call upon you, then please accept the invitation to unmute yourself. To our media friends online, if anyone has a question, please press the raise hand button in Webex. We will just give it a few moments. Angela Tan of The Straits Times.
Hi. Good morning. Thanks for this briefing. Mr. Seah, you have mentioned that you look forward to an outstanding good run going forward. Do you have any specific financial metrics to define this outstanding good run that you expect?
Do you have any financial metrics?
To define the sort of good run that you have talked about.
Well, I don't think it's my role to set metrics and targets for the new chairman and the board. I think, like I said, the world and the market going forward are not easy. I am very confident that the current board and management will seize on opportunities which best suits DBS, continue to take calculated risks to grow the bank. If I were to reflect our latest numbers, the momentum is still there. The bank is still doing well. Okay? But really going forward, all institutions, DBS, will have to track nimbly through a challenging environment. But if I look at the franchise that DBS has, not just in Singapore, but in Asia, the quality of management team and board, I'm very confident the bank will continue to do well.
I mean, I wouldn't set any targets, but you look at our track record and you project it, extrapolate it forward, you probably can kind of guess how we ought to be doing.
I guess, Claire, if you were asking for historical numbers, I can give you some sense. The market cap during Peter's leadership has grown more than 6x from SGD 35 billion- SGD 200 billion. The net profit, annual net profit has risen from SGD 2.65 billion- SGD 11 billion last year. Over the same period, cumulative total shareholder returns, which includes dividends and bonus shares, have exceeded over 1,000%. That's a total compounding shareholder return of 16% per annum.
Okay. Hope that helps, Angela. Move on to the next question, which is from Chanya, Bloomberg. Chanya, please go ahead and unmute yourself and ask your question. Chanya? You need to unmute yourself if you want to ask the question. Okay, I think we might have to come back to you. Is there anyone else online who has a question? Just give it a few more moments. If not, then we might draw this time to a close. Oh, Angela has a follow-up question. Angela?
Do you have a follow-up question?
I just managed to unmute, yeah.
Okay, Chanya.
This is Chanya Chanjaroen from Bloomberg. First of all, congratulations to Anthony for the role, and I also would like to thank Peter for all. You have been remarkable. It is a pleasure working with you and DBS. My question is for Anthony. Several bank CEOs mentioned, and Peter also, challenging periods ahead. How do you see yourself guiding the bank, navigating this challenging environment, and where do you see DBS in the next 10 years? Thank you.
You are talking about challenges in the environment right now?
Yes, I mean
how to navigate.
Well, I think it would be false for me to try and say, we have a divine right as to understanding what the challenges are, given the complexities out there in geopolitics, the changes brought about by AI especially, and the very difficult questions of societal inequality and changes there. What I think stands us in good stead is exactly the culture that Peter Seah has ensured we operate on in DBS, which is to encourage open, honest debate, to welcome divergent opinions, and to collectively come to conclusions where we might not have an exact, precise solution, but we are also not lulled into this false sense of security that we have game planned everything to the last detail, but remain agile and be able to adapt to changing circumstances.
I think the culture of DBS will enable us to navigate this environment which every company needs to deal with. But I think given what we have here, it gives us a competitive advantage in this area. To your point about where I see DBS to be in 10 years' time, I think a lot of it depends on the evolution of some of the challenges that are coming our way, whether it is from AI or whether it is from the digitally native neobanks. There will be challenges to what historically has been our moats, deposits, transfer payments, perhaps even loans. But that is where DBS's understanding and presence in technology and how we have been at this game for the better part of 10- 13 years will also help us navigate this environment going forth. I hope that answers your question.
I mean, I can
Thank you.
I can add on, Chanya. Both Anthony and Peter believe in a team that has diversity but unity, has ability but also humility. And we have all built what I think is the necessary agility needed for us to navigate a volatile future. The key thing is to make sure the foundations are right, and that is what the board has been very focused on. That is what the management team is very focused on. And what are the firm foundations other than culture, which we talked a lot about? It is the foundation built on resiliency, on good data, and on customer trust, right?
As long as you have built a tech architecture that is both resilient but agile, you have built a data moat that is your customer data that is precious but fit for purpose in an agentic world, and you stay humble, but you have a learning culture in your teams, and you make sure that you keep this customer trust and you keep building on this customer trust in an agentic world. I think those are the moats that we will continue to grow, the foundations on which we will continue to grow.
Thank you, Su Shan. We will go back to Angela. Angela, do you have a follow-up question?
Yes. In terms of a DBS of the future, do you see it growing beyond your current regional footprint?
For who?
Who is it?
For the board.
Who is the question directed to, Angela?
For Mr. Lim.
Well, I would say that at present, we are still sticking to our knitting, which is that we intend to be a powerhouse in Asia, and that is where our stronghold is. Having said that, if opportunities do arise at the right price and under the right circumstances, we might entertain opportunities to grow elsewhere. But right at this present point in time, that is not in our plans.
Thank you.
Okay, thank you. I think that is all the questions that we have for this segment, so we will draw this part of the briefing to a close. Thank you, everyone. We will take a few moments to just transit to part two of the briefing, which will be on our 3Q results. Stay online, but we will go off camera and come back in a few minutes. Thank you.
Thank you.
Thank you very much.
Okay, thank you everyone for staying online. We will now continue with the second part of today's briefing, which is on our Q3 results. This morning, we announced third quarter net profit of SGD 2.81 billion. Nine-month net profit rose 2% to a record SGD 8.82 billion. As per our norm, Su Shan and Sok Hui will take us through the highlights of the quarter. Without further ado, Sok Hui, over to you.
Thank you, Edna. Good morning, everyone. We delivered a healthy set of results in the third quarter, with sustained business momentum. Group net interest income rose 4% to SGD 3.71 billion from a year ago, led by strong loan and deposit growth. Fee income and treasury customer sales also increased, led by wealth management. Wealth segment AUM reached a new high, underpinned by record net new money inflows.
The strong performance of our customer business was offset by lower markets trading income amid unfavorable equity market conditions. For the nine months, net profit grew 2% to a record SGD 8.82 billion. Total income rose 2% to a new high of SGD 17.9 billion, led by record fee income and treasury customer sales. Our balance sheet remains strong. Non-performing assets declined 3% from the previous quarter, as new non-performing asset formation was more than offset by repayments. The NPL ratio improved to 0.9%.
Specific allowances were 17 basis points of loans for the third quarter and 16 basis points for the nine months, remaining below the through-the-cycle average. Allowance coverage was 134% and 202% after considering collateral. Capital remained healthy. The CET1 ratio was 15.9%. The MAS reduced the operational risk multiplier from 1.8x to 1.5x , effective 4th November 2026. CET1 on a pro forma basis was 16.1%. The board declared a dividend of SGD 0.81 per quarter per share for the third quarter, comprising SGD 0.66 ordinary dividend and a SGD 0.15 capital return dividend. Next slide. Third quarter year-on-year performance. Compared to a year ago, third quarter net profit declined 5%, or SGD 141 million to SGD 2.81 billion from lower markets trading income. Business momentum was strong, with commercial book income at a record, underscoring the resilience of our franchise.
Group net interest income was SGD 3.71 billion, the second highest on record despite the low SORA. Group net interest income grew 4% or SGD 133 million to SGD 3.71 billion, as balance sheet growth and hedging more than offset lower SORA. Fee income increased 6% or SGD 75 million to SGD 1.43 billion, led by wealth management. Commercial book other non-interest income was 19% or SGD 107 million higher at SGD 685 million, driven by higher treasury customer sales.
Markets trading income declined 65% or SGD 287 million to SGD 152 million amid unfavorable equity market conditions. Expenses fell 1% or SGD 20 million to SGD 2.37 billion, and the cost-to-income ratio was 41%. Profit before allowances was 2% or SGD 67 million lower at SGD 3.47 billion. Total allowances rose SGD 51 million to SGD 175 million. Third quarter Q-on-Q performance. Compared to the previous quarter, net profit declined 9% or SGD 266 million from lower markets trading income.
Operating trends were strong with stable net interest margins, strong loan and deposit growth, as well as wealth management fees and treasury customer sales near their record highs in the second quarter. Group net interest income grew 4% or SGD 130 million, driven by balance sheet growth, while net interest margin was stable at 1.87%. Fee income eased 2% or SGD 28 million, as wealth management fees declined 6% from the record levels in the second quarter. Similarly, treasury customer sales were near the previous quarter's record. Markets trading income fell 68% or SGD 317 million, accounting for most of the decline in quarterly earnings. Expenses were stable. General allowances were SGD 59 million higher, as second quarter benefited from the repayments of weaker credits. Nine months performance. For the nine months, total income and net profit reached new highs.
Total income grew 2% or SGD 317 million to SGD 17.9 billion, while net profit increased 2% or SGD 147 million to SGD 8.82 billion. Group net interest income was little changed at SGD 10.8 billion, despite SORA halving from the previous period. The headwind from lower SORA of more than a billion dollars was offset by proactive hedging, strong loan, and strong deposit growth. Fee income was 15% or SGD 575 million higher at a record SGD 4.37 billion, led by wealth management.
Commercial book other non-interest income increased 19% or SGD 320 million to SGD 1.97 billion, driven by record treasury customer sales. Markets trading income declined 17% or SGD 210 million to SGD 1.01 billion due to a weaker third quarter performance. Expenses rose 2% or SGD 145 million to SGD 7.02 billion, with the cost-to-income ratio stable at 39%, while profit before allowances grew 2% to a record SGD 10.9 billion. Total allowances were 18% or SGD 104 million lower.
The previous period included additional general allowances due to heightened geopolitical and macroeconomic risks. Specific provisions normalized to 16 basis points for nine months 2026, compared with 13 basis points in the previous period. Next slide. Net interest income. Compared to the previous quarter, group net interest income rose 4% or SGD 130 million to SGD 3.71 billion, driven by balance sheet growth, while net interest margin was stable at 1.87%.
Compared to a year ago, group net interest income was 4% or SGD 133 million higher, as balance sheet growth and hedging more than offset the impact of lower SORA. For the nine months, SORA averaged 1.13%, about half the level a year ago. Despite this rate headwind of more than a billion dollars, group net interest income was little changed at SGD 10.8 billion, reflecting the combined benefits of proactive balance sheet hedging and balance sheet growth. Next slide, deposits.
During the quarter, deposits grew 3% or SGD 16 billion in constant currency terms to SGD 650 billion. Both CASA and fixed deposits grew strongly, with FCNR deposits contributing SGD 5 billion to the increase in fixed deposits. For the nine months, deposits grew 7% or SGD 42 billion, with CASA and fixed deposits each contributing about half of the increase. SGD CASA added SGD 15 billion to the increase, enlarging our SGD savings market share. Liquidity remained healthy.
The group's liquidity coverage ratio was 146%, and net stable funding ratio was 115%, both comfortably above regulatory requirements. Loans. During the quarter, gross loans grew 3% or SGD 13 billion in constant currency terms to SGD 484 billion. Non-trade corporate loans rose SGD 11 billion, while wealth management loans increased SGD 5 billion. For the nine months, gross loans grew 8% or SGD 36 billion, led by a SGD 28 billion increase in non-trade corporate loans.
Next slide, fee income. Gross fee income for the third quarter rose 6% from a year ago to SGD 1.68 billion. The growth was led by wealth management fees, which increased 9% to SGD 864 million against the high base a year ago. Transaction service fees grew 8% to a new high of SGD 268 million, while loan-related and card fees also increased. Compared to the previous quarter, gross fee income eased 1%. Wealth management fees declined 6% from the record high in the previous quarter. While customer investment activity moderated, the wealth customer franchise continued to grow, with record net new money inflows lifting assets under management to a new high, which I'll take you through in a subsequent slide.
For the nine months, gross fee income grew 13% or SGD 603 million to a record SGD 5.08 billion, led by a 24% increase in wealth management fees to a new high of SGD 2.69 billion. Transaction services, investment banking, and card fees were also higher. Next slide, customer-driven non-interest income. This slide provides a consolidated view of non-interest income generated from customer activities, comprising fee income and treasury customer sales.
For the third quarter, customer-driven non-interest income rose 8% from a year ago to SGD 2.10 billion, as net fee income grew 6% to SGD 1.43 billion, and treasury customer sales increased 15% to SGD 668 million, with growth across both institutional and wealth customers. For the nine months, customer-driven non-interest income grew 16% to a record SGD 6.31 billion. Net fee income rose 15% to SGD 4.37 billion, and treasury customer sales rose 17% to SGD 1.94 billion, both reaching new highs.
The performance reflects the continued broadening and deepening of relationships with wealth, corporate, and institutional clients. Next slide. Wealth segment comprising Treasures, DBS Treasures Private Client, and Private Bank. For the third quarter, wealth segment total income grew 7% year-on-year to SGD 1.64 billion. The growth was led by a 12% increase in non-interest income as AUM rose 16% in constant currency terms to a new high of SGD 544 billion.
Net new money inflows were strong, reaching a record SGD 15 billion for the quarter, including FCNR, would have been close to SGD 20 billion. Compared to the previous quarter's record, total income eased 4%. For the nine months, total income grew 13% to a record SGD 4.94 billion, as non-interest income increased 25%. Net new money flows for nine months was SGD 36 billion and crosses SGD 40 billion, including FCNR. Next slide, expenses. Expenses were well managed.
For the nine months, expenses rose 2% to SGD 7.02 billion, with the cost-to-income ratio unchanged at 39%. For the third quarter, expenses declined 1% from a year ago and rose 1% from the previous quarter to SGD 2.37 billion. The cost-to-income ratio for the quarter was 41%. Next slide, non-performing assets. Non-performing assets declined 3% from the previous quarter to SGD 4.63 billion. New NPA formation was low and was more than offset by repayments. The NPL ratio improved to 0.9%. Next slide, specific allowances. Third quarter specific allowances amounted to SGD 191 million or 17 basis points of loans. For the nine months, specific allowances were SGD 536 million or 16 basis points of loans, remaining below our through-the-cycle average of 17-20 basis points of loans. General allowances.
As at end of September, total allowance reserves stood at SGD 6.2 billion, comprising SGD 2.41 billion in specific allowances and SGD 3.79 billion in general allowance reserves. The general provision overlay was stable at SGD 2.4 billion. Allowance coverage ratio was 134% and 202% after considering collateral. Next slide, capital. The reported CET1 ratio declined 0.7 percentage points from the previous quarter to 15.9%, mainly due to capital return initiatives and an increase in RWA. The FVOCI impact on the CET1 ratio from higher interest rates was fairly limited at 0.1 percentage point. On a fully phased-in basis, the pro forma ratio was 14.0%. The leverage ratio was 5.7%, well above the regulatory requirement of 3%. On 4th November 2026, the MAS reduced the operational risk multiplier imposed in relation to past digital disruptions from 1.8x to 1.5x .
Adjusting for this, the CET1 ratios as at 30th September would have been 16.1% under transitional arrangements and 14.1% on a fully phased-in basis. Next slide, dividend. The board declared a total dividend of SGD 0.81 per share for the third quarter, comprising an ordinary dividend of SGD 0.66 and a capital return dividend of SGD 0.15. Based on yesterday's closing price and assuming that total dividends are held at SGD 0.81 per quarter, the annualized dividend yield is 4.6%. Next slide, in summary. We sustained our business momentum in the third quarter with robust growth in loans, deposits, and wealth assets. The performance reflects our ability to capture structural opportunities across wealth management and institutional banking. While the global economy has remained resilient, the outlook has become more uncertain amid elevated energy prices, tighter financial conditions, and geopolitical risks.
As we head into 2027, we'll stay nimble in capturing opportunities while managing risk prudently. A more supportive interest rate environment and continued structural growth opportunities would benefit earnings, while our strong capital liquidity and general allowance buffers provide resilience against macroeconomic uncertainty. Thank you. I'll now pass you to Su Shan.
Thank you, Sok Hui. I will kick off by addressing the negative print of year-on-year and quarter-on-quarter. The -1 year-on-year, -4 quarter-on-quarter was primarily due to trading income. Volatility actually did go down in Q2, as did volumes. Trading is just 6% of our total income. To what Sok Hui had said, the underlying structural growth momentum remains robust. What does she mean by that? I think one has to unpeel the underlying growth momentum in terms of, are we seeing growth in number of clients? The answer is yes. Are we seeing a growth in underlying volumes? The answer is yes. Volumes in loans, structural growth there. Volumes in deposits, structural growth there. Volumes in net new money, structural growth there. Volumes in AUM, structural growth there. Volumes in fee. Most importantly, the fee velocity, the fee volume is growing.
I think that speaks to the strong momentum. We will take what comes with us, what comes with the market. Market falls go up, we make more money. Market falls go down, we make less. We will take that as a market player. I think what the overarching message we want to share is that the structural growth momentum that we are building for our franchise, be it number of clients, be it volumes, be it the momentum around fee, that underlying growth is still good. We are pleased to report a solid customer franchise growth. We are pleased to report that both the work that we are doing on wealth, be it the hiring of new RMs that come on board and their revenues are kicking in, to the growth of our new wealth centers. We said we are going to open 18 and upgrade 36.
All that is showing really good results, especially in Taiwan, in Hong Kong, in China, et cetera. Also the work that we are doing around IBG, around the high ROE businesses like FIG, like II, institutional investors, it speaks to the financialization of the markets and the financialization of Asia. That has been pleasing. The IBG treasury customer sales and transaction service fees also reach new heights. I am optimistic there because I believe the work my colleagues are doing using AI to really get our fee momentum up is really showing proof of working, right? Our IBG team has come up with an agent, and the work they are doing around sort of their alpha accounts, as they call it, has demonstrated fee growth of 19% against the non-alpha of 11%. That shows real momentum growth there.
I am optimistic that the work we are doing around AI, the work we are doing around agentic use of AI, the work that we are doing to set ourselves up for an AI world is coming to fruition. The loan and deposit growth, if you unpack that, the market is getting tighter for deposits, but we have bucked the trend and we have actually increased our deposit growth.
I think that speaks to the strong work the teams have done both in treasury and in the businesses to, number one, really figure out the elasticity of deposit pricing. Number two, to be nimble and agile to kind of get market share up before the market gets tight, and to now continue to build on that momentum, and to gate deposits as well, and to get more of our fair share. Both deposit and loan growth has been robust.
On the loan side, what has been pleasing, a lot of it is non-trade loans. It is really showing our market share growth, both in TMT, in government land sales, and also in FIG. So, the financialization, as I said, of the markets is a structural tailwind both for wealth and for FIG, and there we are investing both for new-to-bank customers, for fee generation, for things like custody, servicing, end-to-end digitalization of the offering, and even things like tokenized gold, et cetera. How about net interest income? Well, hopefully we are past the trough. I do think we are. As I said, I think deposits are getting tighter globally. Although it is still quite abundant in Hong Kong and China, elsewhere the markets are getting tighter as the hyperscalers and the data centers continue to suck up a lot of global liquidity.
Our exit NIM was 1.9%, and we are constructive that that will continue to grow next year. So, third quarter group NII was the second highest on record, despite the fact that SORA was still quite low. Don't forget, interest rates only went up on September the 16th. So, the fact that we could still show strong growth in NII in Q3 speaks to the work that we have done to strengthen the franchise. So, net-net, the strong business shows a diversity and growth of our franchise. It shows higher growth and higher ROE segments, and our lower GP and provisions speak to the fact that we are risk-aware. We have been stress testing our portfolio continuously, and we continue to balance both growth and being risk-aware. Okay, next slide. Let us look towards 2027. We are, after all, in Q4 already.
I guess we are all looking, especially after the midterms results last night, looking forward, we still think there will be a lot of uncertainty in the markets. We think the markets will remain choppy, and that is actually not a bad thing, because choppiness gives us a lot more opportunities to do what we need to do to strengthen our balance sheet. It also speaks to us building a strong, reliable, dependable franchise so that when the going gets tough, hopefully more clients come to DBS as a safe and dependable bank. The lower cost delta that we have had, so we talked about sort of two-ish percent, the range is between 2% and 3% this year, as opposed to what we used to have, which is in the 8% or so level.
Actually, that belies a lot of the hard structural foundational work that the team has done in three areas. The first area is around our tech architecture. Whilst we have saved money on coding and coders, a lot of the talent that we have has been redeployed to make our tech architecture a lot more modern, a lot more future-ready, a lot more ready for an agentic world. So, things like cell architecture, service mesh, and really having a multi-layered approach around cyber, tech resiliency, et cetera. All that foundational work has been done, continues to be done, and I am hopeful that that puts us with a strong foot forward in an agentic world. The second foundational work that we have done a lot of work on is on our data architecture. We call this Project Clear.
We've done a lot of work around looking at where our data sits everywhere, from the moment it's born to the moment it's purged. Who, how, ownership, accountability, observability, all that work's being done right now. That's crucial if you want to build a strong agentic bank. The third piece of foundational work is around the work that we've done around our people, our culture, that we spoke about earlier on with our Chairman and our new Chairman, our incoming Chairman. Most of my colleagues have learned to build agents. Most of us know how to work with agents and humans. Most of us have learned to be agile, to unlearn and relearn and reskill.
The work that we've done over the last few years under Piyush on managing through journeys, I counted we have 411 journeys right now in the bank across all our multiple markets. The fact that we've already mapped out our workflows and our work processes, and we are now relooking at how an agentic world can completely change our workflows and work processes to make us even stronger, to make us more future-ready, is important. A lot of the architectural hard work has been done, is being done, that will make us future-ready, and the lower cost delta belies the work that we've done. That means that hopefully what we're doing around tech, around our people, around our data, is indeed working.
We've built capacity, we're building capacity, we continue to build capacity for the structural growth that we see ahead of us using AI, using technology, and having a really good people culture to navigate these volatile times ahead. Looking forward, we are looking at two more rate hikes between now and the end of next year. We're looking for SORA to average 1.6% next year, and a stronger Sing dollar as well. What is our NII sensitivity? It is now SGD 10 million per basis point for Singapore interest rates. If you're looking at rates to go from 1.25- 1.6 on SORA, and we're looking at a smaller negative sensitivity to U.S. rates of -2 down from -4 . This belies the work that we've done. This shows the work that we've done on our interest rate sensitivity.
We were actually able to capture quite a lot of the highest rates 18 months ago. Looking forward, we've kept our duration short so that we have about SGD 100 million still that will come up for hedging between now and the end of next year. If rates go up, we will be able to capture that higher rate delta. Next year, we also continue to think that there should be a healthy loan pipeline. We are already seeing it coming through, and we are looking forward to also a healthy deposit growth as well, probably normalizing to the mid-single digits next year. We're also watchful to see whether higher T-bills will suck up some deposit growth, so all eyes on that. We continue to believe there will be structural growth in wealth management.
Our diversity in our client base means that we are not overtly reliant on any one country or market to grow. Our diversity also of wealth segments, be it in the retail side, the priority bank, or the private bank, means we want to capture that across all segments. Finally, we talk about prudent growth in both FIG and TMT. Data center growth, although that has been strong, we have been highly conservative and structured in our approach. We do not finance any speculative build. We focus on high-quality investment-grade hyperscalers. We have got a lot of CPs around it, and whilst we have led and arranged, we lead arranger for many of the deals, we actually do not end up holding a lot of it. We churn quite a fair bit of that.
Cost-income ratio should be in the low 40s range, and SPs should be within our 17- 20 basis points, continues to be there. We have got ample liquidity buffers, GP buffers, so I think we are in good shape to navigate a volatile future. We have got the people, the capital, the tech, the data, and the culture, and the agent and human kind of combination to continue to build, hopefully, the best AI-enabled bank with a heart. That is it from me. I guess we will open up for questions.
Yeah, we will now take questions. If you have a question, please again press the raise hand button. We have a question from Rae, Reuters. Rae, please go ahead and unmute yourself.
Can you hear me?
Yes, we can.
Yes. Thank you so much for the presentation. I have a couple of questions, if you don't mind. Firstly, it's regarding the drop in trading income, right? It was mentioned in one of the slides that it's due to unfavorable equity market conditions. Could I just get a bit more clarity on that? Because what we saw this quarter across some of, most of the Wall Street and European banks was they actually had quite a big jump in equities trading, and it was more of the fixed income currency side that where the negative pressures came in. Just wondering what was the case with DBS that kind of make this divergence? Secondly is also just on the outlook side. Regarding the 2026 outlook, has there been any revision on that compared to the outlook that you gave in the previous quarter?
Because there wasn't mention of that in this release this morning. Yeah, so just those two questions first. Thank you.
Okay, I will kick off, and then I'll pass the mic to my colleagues. I'll kick off on trading income, and then I'll kick off on the outlook as well. So on the drop in trading income, although the U.S., our U.S. peers did quite well year-on-year, actually on quarter-on-quarter, they were all down. The U.S. peers did very well because they have large prime brokerage and prime businesses. We don't have that at the moment, but we'll see. As you know, we are building up our FIG and II coverage, and that's been growing very nicely, so there should be some structural tailwinds for that looking forward. Trading was down also in Q3 because there was a weaker Asian asset performance. There was also dislocated equity market volatility.
There was a sharp rise towards the end of the quarter on interest rates, and actually there was also a drop in volume. That was why. And also we had a very, very strong Q2, as you know. So that was trading income. On outlook, yes, we revised up our 2026 outlook, right, this year from earlier on. Sok Hui, your
Yeah.
So, maybe just to add to what Su Shan says, all the U.S. banks actually do not split out their trading P&L from their customer franchise P&L. So, it is just a presentation. If you look at our total treasury sort of customer income, plus the trading income, it is actually an increase of 21% for nine months versus the previous year. So franchise income plus the markets trading income is actually healthy growth, even for third quarter 2026, we grew 10% as well. So what you are seeing from the U.S. banks that announced the results is also largely prime brokerage, like Su Shan says, and we are not there. The other thing that you asked about the 2026 outlook, I think we are seeing stronger volumes contributing to the forecasted income.
But because of the slight drag from our T&M business, the trading business, overall is fairly flattish to our guidance in the last quarter. Rae, is that okay?
Yeah. Thank you.
Thank you. Question from Vivian, Business Times. Vivian, go ahead and ask your question.
Thank you for the presentation. I have a question on exposure the bank has to AI-related financing. Are you seeing any emerging risks? Second question is on MAS reducing DBS's operational risk multiplier. What more is needed for the multiplier to return to normal, and does the reduction create maybe room for capital returns? My last question is on Indonesia. There was speculation on the BCA acquisition, which DBS has denied. What is DBS's strategy for expanding in the market? Separately, has DBS observed any impact on its Indonesian business or shifts in fund flows between Indonesia and Singapore amid recent market uncertainty? Okay, thank you.
Okay. I'll kick off in terms of our overall exposure to AI, and then I'll get Kwee Juan from IBG to dimension it in greater detail. On the operational risk multiplier, yes, it's gone down from 1.8 to 1.5. I think we've demonstrated a significant improvement in our operational attack resiliency, and just continuing along that path, we should be on the right path. On Indonesia, okay, let's just unpack those first two questions, and we'll go back to Indonesia. In terms of exposure to AI, if you look at it holistically, then you need to look at corporate banking, our exposures to things like data centers, to the semiconductor supply chain, and downstream to the more of the software companies. In consumer and wealth, it's obviously to the AI stocks. For IBG, primarily it is our exposure to data centers.
Semiconductor companies are all very, very cash rich, so they don't actually need to borrow. We do some cash management for them and some supply chain financing there, but otherwise, they're pretty cash rich. On data centers, our current exposure is about SGD 14.6 billion, and our outstanding is about SGD 8.98 billion. Again, highly structured, so I'll let Kwee Juan go into more details there.
Yeah. For the data center build, we are quite disciplined in looking at the underlying, meaning the offtake. The offtake is from all the hyperscalers. In some of the contracts for those that are in the U.S., that we did a few, it was based on what you would call triple net leases, meaning that what you get as a top line, you get it at the bottom line, because for any adjustments on increase in cost, the hyperscalers will assume it. It's quite clear that we won't do spec build. These builds are for hyperscalers, and we do continuously evaluate the actual ability for that data center to get power, water, and all those things are looked at. We're quite comfortable with what we have as an exposure because they're all structured very well.
I think in consumer and wealth, we have some exposure, not much. It's a highly diversified book, right, Tse Koon ?
Yes. I think on our investment kind of advice that we have given, of course, the AI theme from a macro perspective is one that has been very real for quite a while, and we have been calling on that from, I would say, many, many quarters ago. Having said that, I think from the last, I would say at least 18- 24 months, we have already started to also call on customers to further diversify their portfolio. Because even within the AI theme, we were very mindful of also talking through the full stack, right? The full stack or the full ecosystem around AI. Then beyond that, all the peripheral upstream and downstream, right? We've been calling, for example, on energy. We've been calling on also diversifying into life sciences, et cetera, et cetera, et cetera.
In many respects, I would say portfolios are pretty diversified.
Okay. Your question on the op risk multiplier. Sok Hui, anything to add?
I think I will just add that the multiplier is currently at 1.5 after the reduction. There is the potential to reduce that to 1.0 if we can sustain our resiliency, availability, on an ongoing basis. When it is completely lifted, we expect to see a 0.4 percentage point increase to the CET1 on a transitional basis, and a 0.2 percentage point lift to the final basis.
Okay. Your final question around Indonesia. I will just talk about how the franchise did this year and what perhaps is our outlook going forward. In terms of the franchise this year, so far we are down about 9%, and a large part of that negative is the mark-to-market IDR depreciation against the SGD was about 8%. In local currency terms, total income was down 1%. It is pretty resilient. The balance sheet is resilient. We have been de-risking in terms of the consumer unsecured loans and the SME loan side. I think the book, the balance sheet, it is still growing, and the shape of our balance sheet is a lot more resilient. What was pleasing was also liabilities went up by 5.9% year-on-year and 3% quarter-on-quarter. Pretty good. Provisions are down and expenses are down.
That kind of performance whilst we are hunkering down shows that actually we built a pretty resilient franchise in Indonesia. In terms of the outlook, whilst short term, it is hard to tell. It is a lot of moving parts. Longer term, we remain constructive. We believe that Indonesia, with its incredible mineral natural resource supply chain, with a young population that is very digitally enabled, you have structural long-term growth potential. Just that short term, might be a little bit more uncertain.
Our next question from Nai Lun from The Business Times. Nai Lun, go ahead and ask your question.
Hi. Just want to ask whether you have a bit more of a specific guidance on the net interest income and non-interest income growth for next year. Another question on third-party AI agents. Some of the banks in the U.S. have said that they detected the use of that among customers. Have you seen that at DBS, and how are you managing the risks around that? Thank you.
Okay. You want to give the guidance? Sok Hui will give you the guidance.
Net interest income, if you kind of annualized it from the third quarter net interest income and build in some opportunity for rate hikes as well as loan and deposit growth, I think you come to a number that is closer to a 5% growth for next year. We are guiding to close to mid-single digit for net interest income. For non-interest income, we are doing quite well this year. I think we might It is anybody's guess, right, on market conditions, but we might moderate a bit.
Yeah, I guess, you know, correct. If the markets are great, hopefully double digit, low double digits. The market's not so good, hopefully high single digit. So depends, right, on how the markets perform. Third-party AI agents. Yes, you're right. The U.S. banks have stopped, have said they won't look at it. I think most banks, I mean, every bank now has to look at their terms and conditions, their T&Cs, to see whether a third-party AI agent used by a first-party client should be considered a first party or third party. Our advice to our customers is do not give your credentials out to any third party, especially to any autonomous agents, because you just don't know how and what they're going to do with these credentials. So we discourage it actively.
As for what are we doing, well, we recognize that the long-term trend will be that sooner or later some of our customers will, if not some of them already are, be using agents. They will be using agents to instruct them on what to do, why, how. We are hoping that for now, the final instruction around the ultimately the movement of funds will still have to be enabled by human in the loop.
So there will be some probabilistic journeys along the way to get to the final deterministic journey of executing a transaction for a third-party transaction, for example. For some of the lower-risk transactions, we are looking at how we can enable that in a safe way. As we've always said, today, with AI and agents being let loose by the thousands, cyberattacks are getting more and more frequent. Even Binance got hacked, right?
So, it's important that banks and industries and customers work together to keep our customers safe and our deposits and our customer assets safe. How do we do that? We do that in three ways. The first is you need to have your basic cyber hygiene. What is your basic cyber hygiene? It means trust nobody. Trust no one, inside or outside, zero trust approach, right? That means also, number two, having a multi-layer approach. You don't have just one stack, you have multiple layers from different parts of the world. So, if you get attacked, the attacker has to go through a complicated multi-layer to get to you. The third is you cannot have humans against AI. You must fight AI with AI, and that's exactly what we're trying to do, which then helps you to do your patching faster.
If you have any vulnerabilities, if you don't have mitigants, if it's internet-facing, you got to patch really fast. So having that cadence of quick patching, having that discipline, and having the ability to use AI to counter AI is important.
I think we have time for one last question. Chanya, Bloomberg. Chanya, please unmute yourself. Yeah, go ahead.
Thank you. Can you guide the 2026 net interest margin? Also, just to refer to your response earlier, are you considering building a prime brokerage business? Also, referring to incoming Chairman Lim's remarks at the beginning, beyond Asia, which markets could work best for DBS? Does Su Shan have any ideal location, like a dream one that you want to build upon? Thank you.
Okay. Do you want to, Sok Hui, you start with the 2026-
Chanya asking about the 2026 net interest margin. I think Su Shan has already sort of guided. Their exit NIM in the month of September was 1.90%. We see that sustained in October, and I think you can factor that in for the fourth quarter. That would give you the sort of the NIM for 2026.
Okay. Let me then answer Chanya's two questions.
Prime brokerage.
Yeah, prime brokerage and also the country focus, right? Okay. On prime brokerage, actually, we've been growing our FIG business and our II business, and as a result, our capital markets fees have also grown for the institutional side. We don't have a prime brokerage business, like, put together as such, but we actually have many parts already there, from stock custody to market access, to trading. I think in Asia, we have all the building blocks, and we may put it together, but right now, we're still considering what are the options. What remains is that our focus on the financialization of the Asian markets and the continued growth of our FI, II, and FIG franchise will continue.
Already, we are seeing good pickup in our equity coverage, in our institutional equity coverage, and big pickup to complement our strong wealth coverage in equities, and derivatives as well, and structured products. I think promising is maybe the word I will use. In terms of countries, look, Chanya, we've always been very focused. We don't want to be a global bank. We want to be an Asian bank that is connected. We will connect the world to Asia. Our backyard is growing, whether it's North Asia, South Asia, Taiwan, China, India, growth markets, and then Hong Kong, Singapore alone, two big financial hubs. There's a lot of structural growth opportunities that we need to build capacity to keep growing. We want to focus on where we do best.
Having said that, though, we do have We're present in 19 markets, and some markets more than others are seeing good connectivity growth. That is where we are. Whether it is connectivity for wealth, connectivity for supply chain, diversification, connectivity for FIG coverage, et cetera. I am very pleased that our coverage for Middle East clients has grown, our coverage for European and U.S. clients who see value in dealing with an Asian domicile safe bank. That has been growing. So, our new-to-bank quality customer growth has been growing, and it is a global franchise. I hope that answers your question.
Okay, thank you. I think that is all the time we have for this briefing. We will end the media briefing here, and we will start the analyst briefing in a few moments. Thank you.