Sunday, 22 December 2024
DBS posts record 15% Q3 profit increase, exceeding $2.2B for the first time
DBS Group’s third-quarter 2024 net profit crossed SGD 3 billion ($2.2 billion) for the first time, rising 15% from a year ago and 8% from the previous quarter to SGD 3.03 billion ($2.27 billion).
Total income rose 11% from a year ago and 5% from the previous quarter to SGD 5.75 billion ($4.3 billion). These increases were driven by balance sheet growth, record fee income led by wealth management, higher treasury customer sales, and the strongest markets trading income in 10 quarters. The cost-income ratio was 39%.
For the nine months, net profit increased 11% to a new high of SGD 8.79 billion ($6.6 billion). Return on equity was at 18.8%. Total income rose 11% to SGD 16.8 billion ($12.6 billion) from growth in both the commercial book and markets trading.
Asset quality continued to be resilient, with the NPL ratio declining to 1.0%. Non-performing assets fell 8% from the previous quarter. Specific allowances were at 14 basis points for loans for the third quarter and 11 basis points for the nine months.
Dividend and share buyback
The board declared a quarterly dividend of SGD 54 cents ($0.41) per share for the third quarter, bringing the dividend for the nine months to SGD 1.62 ($1.22) per share.
In addition, the board announced the establishment of a new SGD 3 billion ($2.2 billion) share buyback programme. Under the programme, shares will be purchased in the open market and cancelled. The buybacks will be carried out at management’s discretion and subject to market conditions.
Third quarter 2024 vs. second quarter 2024
Commercial book's net interest income increased by 1% to SGD 3.80 billion ($2.8 billion). Net interest margin was stable at 2.83% helped by the repricing of fixed-rate assets. Loans expanded SGD 3 billion ($2.2 billion) or 1% in constant-currency terms to SGD 418 billion ($314 billion), led by an SGD 2 billion ($1.5 billion) growth in trade loans. Deposits grew SGD 10 billion ($7.5 billion) or 2% in constant-currency terms to SGD 545 billion ($409 billion) from CASA inflows, some of which were transitory.
Commercial book net fee income grew 6% to a record SGD 1.11 billion ($834 million). The increase was largely due to wealth management fees, which rose 18% to SGD 609 million ($457 million). There was broad-based growth in investment products and bancassurance from stronger investor sentiment. Investment banking fees were also higher, rising 63% to SGD 31 million ($23 million) from increased debt capital market income. Transaction service fees were stable at SGD 227 million ($170 million). Card fees and loan-related fees were lower than their previous-quarter records, falling 4% to SGD 302 million ($226 million) and 22% to SGD 146 million ($109 million) respectively.
Commercial book other non-interest income rose 8% to SGD 517 million ($388 million), contributed by higher treasury customers sales.
Markets trading income rose 77% to SGD 331 million ($248 million), the highest in 10 quarters, as FX, interest rate and equity derivative activities benefited from market volatility.
Expenses increased 4% to SGD 2.25 billion ($1.6 billion) led by higher staff and computerisation costs. The cost-income ratio was 39%, and profit before allowances grew 6% to SGD 3.50 billion ($2.6 billion).
Third quarter 2024 vs. third quarter 2023
Commercial book net interest income rose 3% driven by balance sheet growth, with loans increasing 2% and deposits rising 6% in constant-currency terms. Net interest margin was stable.
Commercial book net fee income rose 32%, led by a 55% increase in wealth management. Commercial book other non-interest income grew 4%, with the increase also driven by wealth management.
Markets trading income doubled driven by FX, interest rates and equity derivatives.
Expenses rose 10%, with Citi Taiwan accounting for three percentage points of the increase. The cost-income ratio was stable, and profit before allowances grew 11%.
Nine months 2024 vs. nine months 2023
For the nine months, total income rose 11% to SGD 16.8 billion ($12 billion).
Commercial book net interest income grew 5% to SGD 11.2 billion ($8.4 billion) from a four-basis-point expansion in net interest margin and balance sheet growth. Loans rose 2% in constant-currency terms over the first nine months of the year while deposits grew 4%.
Commercial book net fee income increased 27% to a record SGD 3.20 billion ($2.4 billion) led by wealth management, card and loan-related fees. Commercial book other non-interest income rose 16% to SGD 1.62 billion ($1.2 billion) led by treasury customer sales which reached a new high.
Markets trading income was 25% higher at SGD 764 million ($574 million), with all of the increase in the third quarter.
Expenses rose 11% to SGD 6.50 billion ($4.8 billion), with Citi Taiwan accounting for four percentage points of the increase. The cost-income ratio was stable at 39%, and profit before allowances rose 10% to SGD 10.3 billion ($7.7 billion).
Balance sheet
Asset quality was resilient. Non-performing assets declined 8% from the previous quarter to SGD 4.68 billion ($3.5 billion) as repayments, upgrades and write-offs more than offset new non-performing asset formation. The NPL ratio fell from 1.1% to 1.0%. Specific allowances were SGD 120 million ($90 million) or 14 basis points of loans for the third quarter. Allowance coverage was at 135% and at 242% after considering collateral.
Liquidity remained ample. The liquidity coverage ratio of 144% and the net stable funding ratio of 115% were both well above regulatory requirements of 100%.
Capital remained healthy. With the implementation of final Basel III reforms on 1 July 2024, the reported common equity tier-1 ratio was 17.2% based on transitional arrangements, while the pro-forma ratio on a fully phased-in basis was 15.2%. The leverage ratio was at 6.8%, more than twice the regulatory minimum of 3%.
DBS CEO Piyush Gupta said, “We achieved another record performance in the third quarter. Commercial book net interest margin was supported by reduced interest rate sensitivity of our balance sheet, while wealth management drove fee income to a new high as a benign macroeconomic and interest rate outlook buoyed investor confidence. The new buyback programme we announced today is underpinned by our strong capital position and ongoing earnings generation, and it is another affirmation of our commitment to capital management. We remain well positioned to continue delivering healthy shareholder returns.”
Re-disseminated by The Asian Banker
