Will DBS Stock Also Reach $120 by Year 2040?

Dear readers, yesterday, DBS Group Holdings Ltd (SGX: D05) published a report forecasting the Straits Times Index (STI) to reach 10,000 by year 2040, which represents roughly a 128% increase from current levels.

As we all know, the STI is composed of ~30 constituent stocks. If the STI truly rallies to 10,000 by 2040, then the share-prices of those constituent stocks (and potential future additions) should likewise participate in that broad rally. Hence, it would have been helpful if DBS also published individual stock-price forecasts of those 30 (or so) companies underpinning the STI’s rally by 2040—so we can see which stocks are likely to lead, which may lag, and how the index-composite effect plays out.

And what about DBS itself? What could be the forecasted share-price of DBS by 2040? Surely, if DBS is able to come up with a 2040 forecast for the STI, one could argue it is capable of estimating its own stock price out to that horizon too.

Specifically: Will DBS stock itself also achieve the same ~128% increase as the STI by 2040, which would imply a target in the region of S$120 (or S$120+ depending on currency and share-class)?

In this article, we’ll unpack that question. We’ll examine the current position of DBS, its growth drivers, risks, valuation today, and then build plausible scenarios (base-case, bullish, conservative) for DBS’s share price by 2040. We will assess whether reaching S$120 (or the equivalent) is realistic and what that would imply.

1. Current Snapshot: DBS Group Holdings

1.1 Basic profile

DBS Group is Singapore’s largest bank by assets and a significant regional Asian banking franchise. It is listed on the Singapore Exchange under ticker D05.

1.2 Recent performance & valuation

• According to Simply Wall St, as of the latest update: Market cap ~ S$147.6 billion.
• The P/E ratio is around 13.2× (TTM earnings) and P/B around 2.2×.
• Analysts’ 12-month price target range is roughly S$51–57 (depending on firm) with average around S$52–53.
• Forecast earnings growth is modest: Simply Wall St implies earnings growth c. 2.68% per year.

1.3 Strengths & recent strategic developments

• DBS has strong franchise in Southeast Asia, robust digital-banking adoption, and a reputable balance sheet.
• For example: DBS raised US$2 billion via a USD bond issuance in early 2025, cited as a sign of investor confidence.
• The bank also raised its stake in China’s Shenzhen Rural Commercial Bank (SRCB) to ~19.4% in January 2025, signalling growth ambitions.

1.4 Risks

• Banking in Asia is subject to interest-rate fluctuations, economic cycles, credit-loss risk, regulatory changes and competition (including fintech).
• DBS’s growth rate is relatively modest in mature Singapore but it is expanding regionally—still a risk of slower than expected execution.
• Analysts’ near-term targets suggest limited upside from current levels (only ~5-10% in next 12 months) which suggests the market is already anticipating moderate growth.

2. The STI Forecast and Implications for DBS

When DBS’s parent report says the STI will hit 10,000 by 2040 (≈+128%), it implicitly sends a message that the Singapore market (or the 30-stock basket) will enjoy significant structural growth over the next ~15 years. That growth could be driven by economic expansion, productivity gains, digitalisation, wealth management, Asia-regional growth, etc.

If we assume DBS participates in that growth at the same rate (≈+128% from current to 2040), then one might estimate its share price target simply by applying that growth rate to its current price. Suppose current price is ~S$52 (just for illustration). Then +128% would imply ~S$118 (S$52 × 2.28) by 2040. Rounding, that’s in the ballpark of S$120.

However — this is a simplistic extrapolation. Some important caveats:

• DBS may outperform or underperform the broader index.
• The current valuation (P/E, P/B) may expand or contract.
• Earnings growth, dividend payout, share count changes (buybacks) matter.
• Currency, macro-economic, region-specific risk for Singapore banks need to be factored.
• The “STI reaching 10 000” is a market index target, not an individual bank target; banks may not fully capture index growth.

Thus the question: Is that S$120 by 2040 scenario credible for DBS?

3. Scenario Analysis: DBS Share-Price by 2040

Let’s build three scenarios for DBS’s share price in 2040, based on different annualised return assumptions. Suppose today’s share price is ~S$52 (rounded).

3.1 Assumptions

• Initial share price P0P_0P0​ = S$52
• Time horizon: 15 years (2025 → 2040)
• Annual total return (price + dividends) will drive the final price — but here we focus on price only for simplicity (dividends assumed reinvested or captured in return).
• We ignore dilution or major share-count changes for now.

3.2 Scenario A: Conservative (3% p.a. return)

If DBS grows at 3% p.a., the 15-year price = 52×(1.03)15≈52×1.56≈S$8152 \times (1.03)^{15} \approx 52 \times 1.56 \approx S\$8152×(1.03)15≈52×1.56≈S$81.
This is well below S$120.

3.3 Scenario B: Moderate (5% p.a. return)

If DBS grows at 5% p.a., 15-year price = 52×(1.05)15≈52×2.08≈S$10852 \times (1.05)^{15} \approx 52 \times 2.08 \approx S\$10852×(1.05)15≈52×2.08≈S$108.
Closer to S$120 but still short.

3.4 Scenario C: Ambitious (7% p.a. return)

If DBS grows at 7% p.a., 15-year price = 52×(1.07)15≈52×2.76≈S$14452 \times (1.07)^{15} \approx 52 \times 2.76 \approx S\$14452×(1.07)15≈52×2.76≈S$144.
This would exceed S$120 and is consistent with an index-type growth.

3.5 Interpreting these

• To reach S$120 (from ~S$52) in 15 years corresponds to an annualised growth of about (120/52)1/15−1≈5.6%p.a.(120/52)^{1/15} – 1 \approx 5.6\% p.a.(120/52)1/15−1≈5.6%p.a.
• That 5.6% p.a. return includes both price appreciation and implicitly assumes stable or improving fundamentals, yield, multiple, and reinvestment of dividends.
• If DBS wants to match the STI’s +128% (≈2.28×) over 15 years, that equates to ~5.5% p.a. (consistent with scenario B).

Thus, achieving a share price around S$120 by 2040 is plausible but not easy — it requires DBS to generate ~5.5%+ annual total return (price only) over 15 years, plus dividends for total shareholder return.

4. Key Drivers That Could Make S$120 Happen

Here are factors that could drive DBS from ~S$52 to ~S$120 by 2040 (i.e., ~5.5% p.a.＋):

4.1 Earnings Growth & Expansion

• If DBS can consistently grow its net interest income, fee income (wealth management, trading, fintech) and geographic reach (ASEAN, China, India), then its earnings base expands.
• The bank’s strategic step into China (e.g., SRCB stake) supports regional growth ambitions.

4.2 Multiple Expansion

• If today’s P/E multiple remains constant or expands (say from 13× to 15× or more) due to improved profitability/digital leadership, then the share price will benefit over and above earnings growth.
• If DBS becomes a premium franchise in Asia rather than a “just another bank,” the market may award a higher multiple.

4.3 Dividend / Buybacks

• Regular dividends and share-buybacks reduce share count and increase returns to shareholders.
• If DBS uses excess capital for buybacks, that supports EPS growth.

4.4 Local & Regional Macro Tailwinds

• Singapore’s economy, wealth management growth, tech/fintech adoption, ASEAN rising middle class all form tailwinds.
• If interest-rate cycles are favourable, net interest margins for banks improve.

4.5 Digital & Fintech Edge

• DBS has been a digital pioneer in Southeast Asia. If it leverages that to reduce costs, increase scale and add new business lines (e.g., embedded finance, digital wealth, crypto custody), it opens up upside.

5. Key Risks That Could Prevent S$120

Conversely, several risks may derail the path to S$120 or make it much harder:

5.1 Low Growth Environment

• If Singapore and regional economies grow slowly, banking margins com

5.2 Valuation Compression

• If the market lowers the multiple (for example, due to regulatory risk, fintech disruption, banking sector issues), then even with moderate earnings growth the share price may stagnate.
• Today’s analyst targets (~S$52–57) suggest limited near-term upside.

5.3 Interest-Rate / Credit Risk

• Banks are heavily affected by interest-rate cycles and credit quality. Rising NPLs, margin pressure, regulatory capital demands would hurt.
• Unfavourable macro shocks (global slowdown, property slump in China/ASEAN) weigh on banks.

5.4 Execution Risk & Dilution

• Regional expansion is subject to execution risk (e.g., local regulation, competition, cultural differences).
• If DBS issues more shares, dilutive effects may reduce share-price growth potential.

5.5 Banking Sector Disruption

• Fintech players, non-bank competition (Big Tech in payments, embedded finance), regulatory changes might disrupt traditional banking moats.

6. My View: A Balanced Assessment

Given the above, here is my summary view:

• It is possible that DBS reaches around S$120 by 2040, but it is by no means assured.
• Reaching S$120 implies ~5.5% annualised price growth (from ~S$52 today) over 15 years, excluding dividends. When including dividends, the total shareholder return maybe higher.
• To achieve that, DBS will need to outperform the modest growth implied by current analyst estimates, avoid multiple contraction, and benefit from favourable macro/regional tailwinds.
• If DBS under-performs (e.g., only ~3% annual growth), then the result could be far lower (e.g., S$80 or so).
• If DBS over-performs (say ~7% annual growth plus multiple expansion), then it could exceed S$120 (perhaps S$140+).

I personally lean toward something between the moderate and ambitious scenarios — say S$110-S$130 by 2040 as a plausible range, assuming steady execution, favourable regional growth, moderate multiple improvement and consistent dividends/buybacks. If any of those factors falter, then reaching S$120 becomes more challenging.

7. What Should Investors Watch Going Forward?

Here are the key metrics and developments you should monitor for DBS:

• Earnings Growth: Track DBS’s net interest income (NII), non-interest income (fees), cost-income ratio, ROE (return on equity). By monitoring whether DBS is meeting or exceeding management targets, you get a sense of trajectory.
• Dividend Policy & Buybacks: The size of dividend payouts and share-buyback programmes. Bigger shareholder returns support valuations.
• Valuation Multiples: P/E, P/B trend compared to regional peers. If DBS’s multiple expands, it boosts share-price growth.
• Regional Expansion Execution: Success in ASEAN, China, India — how quickly DBS scales new markets and converts digital initiatives into profits.
• Interest-Rate / Credit Environment: For a bank, margins and asset quality matter enormously. If rates compress and credit quality worsens, growth stalls.
• Regulation & Disruption Risks: Keep an eye on regulatory changes (capital, fintech licensing, cross-border banking restrictions), and how DBS is responding to fintech/Big Tech threats.
• Macro/Market Conditions: Singapore and regional economies, trade flows, wealth management growth in Asia – because these provide the context for banking growth.
• Share-count & Capital Return: Any major share issuance, acquisition, or large change in capital return policy can affect shareholder value.

8. Final Thoughts

In summary: yes, the headline figure of “S$120 by 2040” for DBS stock is not unrealistic, but it is ambitious. It will depend on constructive growth, successful regional expansion, dividend/buyback discipline, and favourable valuation outcomes. If any of those elements is missing or weaker, the result could fall short.

For investors considering DBS now, it’s important to view it as a long-term (~15 year) play. The market’s current targets suggest only modest near-term upside, so the value lies in the long-term structural growth story rather than quick wins. If you believe in Asia’s growth, Singapore’s banking system and DBS’s digital/wealth ambitions — then positioning for S$120 by 2040 might make sense. If you’re more conservative or worried about risks, you may treat it as a base-case of S$90-100 or so instead.

As always, this is not investment advice. Please consider your own risk tolerance, portfolio diversification, time horizon and do further research (or consult a financial advisor) before committing.