DBS Group Holdings has reported a net profit of $2.8 billion for the 2QFY2024 ended June 30, 4% higher y-o-y, and beating the consensus estimate of $2.72 billion. For the quarter, return on equity (ROE) was 18.2%, down from 19.2% in 2QFY2024.
For the 1HFY2024, the bank’s net profit stood at a new high of $5.76 billion, 9% higher y-o-y from last year’s record figure. Its ROE for the six months stood at 18.8%.
Earnings per share (EPS) for the 1HFY2024 stood at $4.05. DBS has declared a dividend of 54 cents per share for the second quarter, bringing first-half dividend to $1.08 per share. This is up from 90 cents this time last year.
1HFY2024 total income rose by 11% y-o-y to $11.04 billion thanks to growth in the bank’s commercial book total income and offset by lower markets trading income.
Commercial book total income was up by 11% y-o-y to $10.61 billion. Net interest income (NII) grew by 6% y-o-y to $7.42 billion due to growth in the balance sheet and a slightly higher net interest margin (NIM) of 2.83%, 2 basis points (bps) higher y-o-y and 6bps higher q-o-q.
For 1HFY2024, group NIM was unchanged at 2.14% y-o-y, while commercial book NIM was up 5bps to 2.80%. Loans grew by 1% to $425 billion, led by trade loans and non-corporate loans. Deposits also increased by 2% to $551 billion in constant currency terms. Current account, savings account (Casa) outflows, which slowed from the previous year, were offset by an increase in fixed deposits.
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In 1HFY2024, net fee income reached a new high as it surged by 25% y-o-y to $2.09 billion. In the 2QFY2024, fee income rose on a y-o-y basis due to wealth management, cards and loan-related fees.
Other non-interest income (non-II) under the commercial book rose by 23% y-o-y to $1.1 billion from the record fee income and treasury customer sales, which also reached a new high. Excluding non-recurring gains, other non-interest income was up by 12% y-o-y.
Markets trading income fell by 3% y-o-y to $433 million as NII saw a deeper loss of $317 million, 21% higher than the loss of $261 million in the year before. Non-interest income rose by 6% y-o-y to $750 million.
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DBS’s cost-to-income ratio stood at 38.5% during the 1HFY2024, up from 38.2% in the corresponding period the year before.
In 2QFY2024, non-performing assets (NPA) fell 3% from the previous quarter to $5.08 billion as new NPA formation was more than offset by repayments and write-offs. The non-performing loan (NPL) ratio stood unchanged at 1.1%.
Specific allowances for 2QFY2024 amounted to $97 million, or 8bps of loans, bringing the 1HFY2024 amount to $210 million, or 9bps. General allowances of $51 million were taken in 2QFY2024 and $73 million for 1HFY2024.
In 2QFY2024, total allowances as a percentage of NPA rose slightly to 129% from 125% in the previous quarter, while total allowances as a percentage of unsecured NPA rose to 227% from 223% last quarter.
The liquidity coverage ratio of 148% and the net stable funding ratio of 116% were both well above regulatory requirements of 100%.
Capital remained healthy with the Common Equity Tier-1 (CET-1) ratio at 14.8%, up from 14.7% last quarter and 14.1% this time last year. The leverage ratio was at 6.5%, unchanged q-o-q and y-o-y, and more than twice the regulatory minimum of 3%.
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‘Mid- to high-single digit’ full-year net profit growth
DBS CEO Piyush Gupta is guiding for full-year group net interest income growth to be mid-single-digit percent. NII sensitivity has been reduced to $4 million per bp of the US Fed funds rate, down from $18 million to $20 million in 2021.
Gupta is also guiding for commercial book non-interest income growth to be in mid-to-high teens, with “some risks if market uncertainty persists”.
Gupta expects total income growth for FY2024 to be a high-single digit, net profit growth a mid- to high-single digit, the cost-to-income ratio to be around 40% and specific provisions (SP) around 10bps to 15bps.
“While recent market volatility and ongoing geopolitical tensions have resulted in heightened uncertainty, we have built resilience against the risks of an economic slowdown and lower interest rates,” says Gupta. “Our high general allowance reserves, reduced interest rate sensitivity, strong capital position and ample liquidity will position us to continue supporting customers and delivering shareholder returns.”
DBS will hold a results briefing later this afternoon.
DBS last to report 1HFY2024 results
DBS released its 1HFY2024 results during the midday break on Aug 7, straying from the typical pre-open announcement. The bank had earlier said its results would be released after trading hours on Aug 7, but this was superseded in an Aug 2 bourse filing.
DBS’s peers United Overseas Bank
(UOB) and Oversea-Chinese Banking Corporation
(OCBC) released their 1HFY2024 results on Aug 1 and Aug 2 respectively.
UOB reported a core net profit of $3.05 billion for 1HFY2024, down 1% y-o-y; while OCBC posted a record net profit of $3.93 billion, 9% higher y-o-y from last year’s record figure.
UOB’s NIM in 2QFY2024 rose 3bps q-o-q but fell 7bps y-o-y to 2.05%. OCBC’s NIM fell 7bps q-o-q and 6bps y-o-y to 2.20% in 2QFY2024.
Last quarter, DBS reported a record net profit of $2.96 billion for 1QFY2024, up 15% y-o-y and 24% q-o-q. A subsequent intra-day share price spike moved DBS’s market cap above $100 billion for the first time.
Shares in DBS were trading 34 cents higher, or 1.04% up, at $33.09 prior to the midday break on Aug 7. DBS’s share price has fallen nearly 10% over the past five days.
