DBS Bank Ltd.

Reflecting this, DBS' NIMs could moderate by about 10 bps a year over 2024-2026. While interest margins have been strong so far in 2024, we anticipate a normalization in the second half of 2024 due to our expectation of rate cuts. Our base case assumes resilient asset quality, given DBS has built up substantial loan loss reserves over the past few years. The stable outlook on DBS reflects our expectation that the bank will maintain its high systemic importance in Singapore and solid financial footing over the next 18-24 months. We believe both positive and negative rating actions are unlikely over the next one to two years. Our assessment of the bank's stand-alone credit profile (SACP) would need to decline

...DBS Bank Ltd.'s net interest margins (NIMs) likely peaked in 2023. We see the Federal Reserve (Fed) making its first rate cut in the fourth quarter of 2024 and forecast cumulative rate cuts of 250 basis points (bps) by the second half of 2026. Reflecting this, DBS' NIMs could moderate by about 10 bps a year over 2024-2026. While interest margins have been strong so far in 2024, we anticipate a normalization in the second half of 2024 due to our expectation of rate cuts. Asset quality should remain resilient, with some manageable deterioration. DBS' gross nonperforming loan (NPL) ratio could marginally increase to 1.1%-1.3% over the next 18-24months, from 1.1% as of Dec. 31, 2023. Higher-for-longer interest rates could result in some backsliding of asset quality, particularly among loans to lower-income groups or the more vulnerable small and midsize enterprises (SMEs)....

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