DBS Bank announced on Monday (February 10) a record-high annual net profit, prompting analysts to raise the bank's target price. This suggests a potentially higher valuation in the future and an increase in dividend payouts.

Maybank Securities has increased DBS Bank's target price by nearly 10% from SGD 46.91 to SGD 51.37, assigning a "buy" rating. RHB maintained its "buy" rating on Tuesday and raised the target price by nearly 15% from SGD 44.70 to SGD 51.20.

On Tuesday, DBS Bank's stock price closed down by SGD 0.53, or 1.2%, to SGD 44.85.

Maybank noted that DBS Bank's return on capital is highly commendable. Although the compound annual growth rate of earnings from fiscal year 2025 to 2027 might only be 1%, dividends could grow by 7%, with a yield exceeding 6.5%.

Maybank has raised the expected dividend per share (DPS) for the fiscal years 2025 to 2027 by 14% to 22%.

"The group's capital return policy should deliver a dividend yield of over 6.5%. We believe all these justify a higher valuation," the report stated.

The company added that the succession of DBS Bank's new CEO would ensure the bank's stability while also focusing more on growth areas with high return on equity (ROE).

Considering these factors, Maybank analysts predict that DBS Bank's sustainable ROE will average 15.8% from fiscal year 2025 to 2027, compared to 12% over the past decade.

DBS Bank's Deputy CEO, Ms. Tan Su Shan, stated that after taking the helm on March 28, she would focus on developing businesses that offer high return on equity (ROE).

DBS Bank mentioned that among its high ROE businesses, wealth management has performed "outstandingly."

The bank reported on Monday that its annual net profit reached a new high of SGD 11.3 billion, a 12% increase from the previous year. DBS Bank noted record sales to treasury customers, fee income surpassing SGD 4 billion for the first time, and a rebound in market trading income.

The company announced an 11% year-on-year increase in net profit for the fourth quarter.

RHB added that one of the key highlights was the DBS Bank management's clarification of the SGD 8 billion in excess capital and their commitment to return these funds to shareholders over the next three years.

DBS Bank announced on Monday that it would distribute a capital return dividend of SGD 0.15 per share quarterly in fiscal year 2025.

RHB pointed out that this exceeds its earlier share buyback plan and includes an additional SGD 0.24 in ordinary dividends this year. After accounting for the capital return dividends, RHB's forecast for fiscal year 2025 dividends is SGD 3.06, up from SGD 2.46.