DBS Group Holdings has reported earnings of $1.70 billion for the 2QFY2021 ended June, 37% higher than earnings of $1.25 billion in the corresponding period the year before.
On a quarter-on-quarter basis, earnings for the 2QFY2021 fell 15% compared to the $2.0 billion in earnings posted in the 1QFY2021.
The bank’s earnings for the 1HFY2021 stood at a record $3.71 billion, with the two highest quarters on record. The figure represents a 54% growth from the earnings of $2.41 billion posted in the 1HFY2020.
“Business momentum and asset quality have both been better than expected as the economic recovery from the pandemic takes hold,” says DBS CEO Piyush Gupta in a statement dated Aug 5.
“While risks remain, our pipeline remains healthy and we expect business momentum to be sustained in the coming quarters,” he adds.
The bank has declared a dividend of 33 cents per share for the 2QFY2021, reverting to that of pre-Covid-19 levels with the full lifting of the regulatory restrictions.
The quarter’s dividend brings the total dividend for the 1HFY2021 to 51 cents per share.
Earnings per share (EPS) stood at 2.88 cents for the 1HFY2021, up from the 1.86 cents posted in the 1HFY2020.
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Total income for the 2QFY2021 fell 4% y-o-y and 7% q-o-q to $3.59 billion.
Loans rose 3% q-o-q from broad-based growth led by trade and non-trade corporate loans.
Deposits stood 1% higher q-o-q on the back of continued current and savings accounts (CASA) growth, which was offset by a reduction in fixed deposits.
Net interest income (NII) for the quarter fell 9% y-o-y and 1% q-o-q to $2.09 billion due to a 17-basis point decline y-o-y in net interest margin (NIM) at 1.45%, offsetting the broad-based loan growth.
2QFY2021 net fee and commission income increased 27% y-o-y to $868 million due to the double-digit percentage increase in all activities. The growth was led by a 31% y-o-y increase in wealth management fees, more than double y-o-y in investment banking fees and a 26% y-o-y increase in card fees amid the recovery in the financial markets and consumer spending.
Other non-interest income in the 2QFY2021 fell 15% y-o-y to $632 million due to lower trading income, compared to the two strongest trading quarters on record. The dip was also attributable to the higher investment gains posted in the 2QFY2020.
Expenses increased by 4% y-o-y to $1.54 billion, but fell 3% q-o-q in the 2QFY2021 as both staff and non-staff costs declined. Expenses were little changed y-o-y, excluding the erstwhile Lakshmi Vilas Bank (LVB).
Total income for the 1HFY2021 fell 4% y-o-y to $7.44 billion.
NII for the half-year period fell 12% y-o-y to $4.2 billion as NIM fell 27 basis points to 1.47%, with most of the decline occurring in the two quarters after global interest rate cuts in March 2020.
Loans were up 7% y-o-y in constant currency terms and 6% up year-to-date (y-t-d) with broad-based growth led by trade and non-trade corporate loans, as well as consumer loan growth from both housing and wealth management.
Deposits were up 9% y-o-y due to CASA inflows, which enabled higher cost fixed deposits to be lowered.
For the 1HFY2021 Casa deposits grew by 24% y-o-y to $366 billion.
Fee income grew 20% y-o-y to $1.82 billion due to broad-based momentum across product lines.
Wealth management fees grew 27% y-o-y to a new high of $945 million due to investment product sales being boosted by an improving economic outlook.
Card fees rose 10% y-o-y to $334 million led by online transactions as consumer spending covered from the 1HFY2020.
Investment banking fees increased 81% y-o-y to $114 million from a recovery in equity transactions and record fixed income fees.
Other non-interest income fell 2% y-o-y to $1.43 billion due to the lower investment gains on the back of favourable market conditions in the 1HFY2020.
Trading income increased 38% y-o-y to $1.04 billion as Treasury Markets non-interest income and treasury customer income both rose to new highs.
Non-performing loans (NPL) for the 1HFY2021 stood stable y-o-y at 1.5%.
Expenses were up 3% y-o-y to $3.13 billion with stable underlying expenses, excluding the amalgamation of LVB.
The bank’s cost-to-income ratio for the 1HFY2021 stood at 42%.
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Its Common Equity Tier-1 (CET-1) ratio rose 0.2 percentage points q-o-q to 14.5%, remaining well above the regulatory ratio of 9%.
DBS’s leverage ratio stood at 6.8%, more than double the regulatory minimum of 3%.
As at end-June, cash and cash equivalents stood at $45.7 billion.
According to the CEO statement posted, the bank is unlikely to exceed $0.5 billion in its full-year total allowances.
Shares in DBS closed 37 cents higher or 1.2% up at $30.58 on Aug 4.
Photo: Bloomberg
