DBS Group Holdings has posted a record net profit of $6.81 billion for the FY2021 ended December, up 44% y-o-y. The higher net profit was backed by higher return on equity (ROE) at 12.5% from 9.1% in the FY2020 previously.
The bank’s earnings for the 4QFY2021 stood 37% higher y-o-y at $1.39 billion.
During the quarter, the bank declared a dividend of 36 cents, bringing the total dividend for the FY2021 to $1.20. The dividend will be payable on or around April 22.
4QFY2021’s dividend was up 9.1% q-o-q from the dividend of 33 cents in the 3QFY2021 and up 100% y-o-y from the 18 cents declared in the 4QFY2020.
The scrip dividend scheme will not be applied to the FY2021 final dividend.
Total income for the FY2021 fell 2% y-o-y to $14.30 billion.
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FY2021 net interest income (NII) fell 7% y-o-y to $8.44 billion as the full impact of interest rate cuts in the previous year was moderated by broad-based loan growth.
Net interest margin (NIM) fell 17 basis points to 1.45% in the FY2021, with most of the decline occurring in the first half of the year.
FY2021 net fee and commission income rose 15% y-o-y to $3.52 billion, as most fee segments recorded higher figures.
Wealth management fees increased 19% y-o-y to a record $1.79 billion from higher sales of investment products and bancassurance.
Transaction services fees grew 13% y-o-y to a new high of $925 million from the growth in trade finance and cash management fees.
Investment banking fees rose 47% y-o-y to $218 million on the back of a new high in fixed income fees and higher equity market fees.
Card fees rose 12% y-o-y to $715 million with combined credit and debit card spending reaching new highs.
Loan-related fees fell 1% y-o-y to $413 million.
Trading income for the FY2021 rose 27% y-o-y to $1.79 billion.
Other income, on the other hand, fell 49% y-o-y to $542 million in the FY2021.
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Non-interest income was up by 6% y-o-y to $5.86 billion.
Other non-interest fell 5% y-o-y to $2.33 billion.
Loans expanded 9% y-o-y to $409 billion, marking the fastest growth in seven years. Non-trade corporate loans rose 8% y-o-y to $241 billion on the back of broad-based growth led by Singapore and Hong Kong.
Trade loans grew 10% y-o-y to $43 billion as regional trade activity strengthened.
Housing loans were up by 5% y-o-y to $79 billion from strong bookings throughout the FY2021.
Other consumer loans grew by 15% y-o-y led by wealth management loans on the back of heightened investing activity.
Deposits grew 7% y-o-y to $502 billion, with strong current and savings account (CASA) inflows.
The proportion of CASA to total deposits improved three percentage points to a record 76% for the FY2021.
The liquidity coverage ratio of 135% and the net stable funding ratio of 123% were both above regulatory requirements of 100%.
The bank’s cost-to-income ratio for the FY2021 stood three percentage points higher y-o-y at 45.1%. FY2021 expenses grew 5% y-o-y to $6.47 billion due to higher staff costs and investment spend.
Profit before allowances fell 7% y-o-y to $7.83 billion due to the declines in net interest margin and gains from investment securities as well as the increase in expenses.
In the FY2021, DBS recorded two one-time items: a gain of $104 million on the completion of the n Shenzhen Rural Commercial Bank (SZRCB) transaction. A contribution of $100 million was made to the DBS Foundation and other charitable causes.
As at Dec 31, 2021, total non-performing loans (NPL) stood at $5.29 billion, with an NPL rate of 1.3%, down 0.3 percentage points y-o-y.
DBS’s common equity tier-1 (CET-1) ratio stood at 14.4%.
On Feb 7, the bank was imposed with an additional capital requirement due to the digital disruption in November 2021.
“On the conservative assumption that the operational risk penalty is not lifted before the consolidation of Citigroup’s Taiwan consumer banking business, and assuming no capital accretion, the CET-1 ratio would be 13.3%, which is at the upper end of the target CET-1 range,” says the bank in a statement on Feb 14.
The bank’s leverage ratio of 6.7% remains more than twice the regulatory minimum of 3%.
“The robust growth in our loan book, along with the solid 15% growth in fee income, speak to a recovering economic environment as well as our broadly diversified franchise. I am pleased that we have managed expenses and credit costs well through this period,” says DBS CEO Piyush Gupta.
“Equally important, we have made significant investments in our future by expanding our footprint in India, Taiwan and the Greater Bay Area and building new digital platforms to give us additional engines of growth,” he adds.
“To share our success with the community, we used a one-time gain to contribute a further $100 million for the DBS Foundation and other charitable causes,” he continues. The increased funding will support the expanded scope of the DBS Foundation and its new Community Impact Chapter, as well as other philanthropic initiatives and relief measures, says the bank in a press release dated Feb 11.
“We look forward to the coming year with a prudently managed balance sheet that is poised to benefit from rising interest rates,” he concludes.
Shares in DBS closed 40 cents higher or 1.09% up at $37.25 on Feb 11.
Photo: Bloomberg
