For the 3QFY2022 ended Sept 30, DBS Group Holdings reported earnings of $2.24 billion, which is a new high for the group.
The quarter’s earnings, which were up by 32% y-o-y and 23% q-o-q, were attributed to the higher net interest margin (NIM) and sustained business momentum.
Return on equity (ROE) also reached a new high of 16.3%
During the period, DBS’s net interest income (NII) increased by 44% y-o-y to $3.02 billion, as its NIM surged by 47 basis points (bps) to 1.90% and loan growth grew 6% y-o-y.
Net fee and commission income, however, fell 13% y-o-y to $771 million, due to lower wealth management and investment banking fees and offset by higher card- and loan-related fees.
Card fees rose 23.9% y-o-y to $223 million on record overall spending on the back of a continued recovery in travel. Loan-related fees grew 15.1% y-o-y to $122 million. Transaction fees fell by 3.8% y-o-y at $230 million.
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Other non-interest income surged by 32% y-o-y to $753 million from higher Treasury Markets non-interest income, treasury customer income and investment gains.
As a result, total income increased by 28% y-o-y to a record $4.54 billion.
Expenses rose 9% y-o-y to $1.83 billion led by higher staff costs.
According to the group, underlying loan momentum during the quarter stood strong on the back of faster non-trade corporate and housing loan growth. The gains were moderated by lower trade loans as maturing exposures were not replaced due to “unattractive pricing”. Including trade loans, overall loans rose to $429 billion. In constant currency terms, loan momentum grew by 2% y-o-y in the 3QFY2022.
During the 9MFY2022, DBS’s earnings increased by 8% y-o-y to a new high of $5.85 billion.
NII increased 22% y-o-y to $7.66 billion on the back of a 20 bps expansion in NIM and 6% higher loan growth.
Net fee and commission income fell 10% y-o-y to $2.43 billion due to lower wealth management and investment banking fees, which more than offset growth in other fee activities.
Other non-interest income dipped by 0.15% y-o-y to $1.99 billion.
Total income for the 9MFY2022 grew by 10% y-o-y to $12.08 billion.
Expenses grew 7% to $5.13 billion, and profit before allowances rose 12% to $6.96 billion.
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DBS’s earnings per share (EPS) for the 3QFY2022 and 9MFY2022 stood at $3.41 and $3.01 respectively on a basic and diluted basis.
As at Sept 30, DBS’s non-performing assets (NPAs) fell 5% q-o-q to $5.60 billion. The bank’s non-performing loan (NPL) ratio also fell to 1.2% from 1.3% in the previous quarter.
The lower NPAs and NPL ratio were due to the low NPA formation and more than offset by higher upgrades and repayments.
Specific allowances were at $25 million or two bps of loans for the third quarter. General allowances of $153 million were taken. Allowance coverage stood at 120% and at 216% after considering collateral.
DBS’s current accounts and savings accounts (CASA) fell by 8.37% q-o-q to $350 million.
Its loan-to-deposit (LDR) ratio stood at 81% as at Sept 30.
The bank’s liquidity coverage ratio (LCR) stood at 133%, while its net stable funding ratio stood at 114%, both above regulatory requirements.
As at Sept 30, DBS’s common equity tier-1 (CET1) ratio fell by 0.4 percentage points q-o-q to 13.8% due to loan growth and the marked-to-market impact on fair value through other comprehensive income (FVOCI) securities. The leverage ratio of 6.1% was twice the regulatory minimum of 3%.
The bank has declared a quarterly dividend of 36 cents per share, bringing its total dividend for the 9MFY2022 to $1.08 per share.
“The record earnings we achieved amidst challenging market conditions in the third quarter reflected the strength of our franchise. Business momentum was maintained, asset quality was resilient and the inherent value of our deposit franchise was more fully realised,” says DBS Group Holdings CEO Piyush Gupta.
“The record return on equity of 16.3% demonstrates the significant structural improvements we have made, including from our digital transformation. We enter the coming year with leverage to rising interest rates, a strong balance sheet and proven ability to capture growth, which will enable us to continue delivering shareholder returns,” he adds.
Shares in DBS closed 16 cents higher or 0.46% up at $34.74 on Nov 2.
