By Yantoultra Ngui

SINGAPORE (Reuters) -Singapore's biggest bank DBS Group said it expects group net interest income to improve this year and announced a capital return dividend plan on Monday as it posted a 10% rise in fourth-quarter net profit, matching expectations.

Southeast Asia's largest bank by assets said it now expected group net interest income in 2025 to marginally beat last year's S$15.04 billion ($11.1 billion), an upgrade to its previous projection for net interest income to remain around 2024 levels.

"While macroeconomic and geopolitical uncertainties persist, the franchise and digital transformations carried out over the past decade position us well to continue delivering healthy returns," DBS Chief Executive Officer Piyush Gupta said in a statement.

DBS's net interest margin, a key profitability gauge, rose to 2.15% during the quarter from 2.13% the same quarter a year earlier.

DBS, the first Singapore lender to report earnings season, said October-December net profit climbed to S$2.62 billion ($1.9 billion) from S$2.39 billion a year earlier, on the back of growth in both commercial book and markets trading.

This matched the mean estimate of nearly S$2.63 billion from five analysts, according to LSEG data.

DBS announced a final dividend of 60 Singapore cents per share, versus 54 cents declared during the same quarter a year ago.

It said it planned to introduce a capital return dividend of 15 Singapore cents per share per quarter to be paid out over 2025, and expected to pay out a similar amount of capital either via this plan or other mechanisms in subsequent two years.

The 2025 capital return dividend plan on top of a S$3 billion buyback announced in the third quarter signaled DBS's commitment to shareholder return while striving for long-term growth, analysts said.

"We expect positive share price reaction," Jefferies' equity analysts Sam Wong and Shujin Chen said in a research note following the results.

DBS will see a change in CEO in March and investors will be focusing on potential changes. Tan Su Shan, who previously headed up DBS' institutional banking group and is currently deputy CEO, will take over from Gupta, making her the first woman to lead the bank.

Singaporean banks were forecast to post stronger profits for the fourth quarter, but growth could take a hit this year as U.S. President Donald Trump's trade tariffs and other policies threaten to undermine the global economy, analysts said. Rival United Overseas Bank is next to report its financial results on Feb. 19.

($1 = 1.3563 Singapore dollars)