DBS Group Holdings D05 has reported a net profit of $8.19 billion for the FY2022 ended Dec 31, 2022, 20% higher than the net profit of $6.81 billion in the year before.
The record yearly net profit was thanks to the higher total income and higher net interest income, which was boosted by higher interest rates.
During the 4QFY2022, the bank’s net profit surged by 69% y-o-y to $2.34 billion, which is a quarterly record.
In the FY2022, DBS’s net interest income (NII) grew by 40% y-o-y to $10.72 billion. This was attributed to the 48 basis point (bps) increase in net interest margin (NIM) of 2.11% and loan growth of 4% to $415 billion. The loan growth was due to growth in the first nine months of the year and moderated by a decline in the 4QFY2022 as corporations sought cheaper financing options or repaid opportunistic borrowing.
Non-trade corporate loans increased by 5% y-o-y to $248 billion upon broad-based growth. Trade loans rose by 4% y-o-y to $44 billion with an increase during the 1HFY2022 and offset in the 2HFY2022 due to unattractive pricing.
Housing loans grew by 4% y-o-y to $81 billion with most of the growth seen in the 2HFY2022. Other consumer loans fell by 7% y-o-y to $43 billion due to a drop in wealth management loans.
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Net fee and commission income fell by 12% y-o-y to $3.09 billion due to lower wealth management and investment banking fee income on the back of weaker market conditions.
Wealth management fees fell by 26% y-o-y to $1.33 billion due to weaker market conditions which led to lower investment product sales. Investment banking fees fell by 44% y-o-y to $121 million as capital market activities slowed.
Card fees, on the other hand, rose by 20% y-o-y to a new high of $858 million as overall spending and travel spending recovered.
Loan-related fees increased by 11% y-o-y to $459 million.
Transaction fees stood stable at $929 million as higher cash management and trade fees were offset by lower brokerage commissions from institutional clients.
Other non-interest income increased by 1% y-o-y to $1.52 billion due to higher treasury customer sales and offset by lower investment gains.
Net interest income under the bank’s treasury markets total income fell by 72% y-o-y to $222 million.
Treasury markets, which exclude income from customer sales, has been presented separately from its commercial book income for the first time. This was done to “enhance transparency of its customer franchise performance trends,” according to the bank.
Non-interest income under treasury markets total income increased by 31% y-o-y to $952 million.
Total income for the FY2022 increased by 16% y-o-y to $16.50 billion, crossing the $16 billion mark for the first time.
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Total expenses increased by 10% y-o-y to $7.09 billion.
Profit before allowances increased by 22% y-o-y to $9.41 billion, another new high.
Allowances for credit and other losses surged to $237 million from $52 million in the year before.
Share of profits or losses of associates and joint ventures (JVs), which was under non-interest income previously, increased by 90% y-o-y to $207 million due to the acquisition of Shenzhen Rural Commercial Bank in 2021.
Total expenses rose by 10% y-o-y to $7.09 billion due mainly to higher staff costs.
The bank’s cost-income ratio stood at 46%, up from the previous year’s 43%.
Customer deposits grew by 7% y-o-y to $527 billion. This was due to an 80% y-o-y surge in fixed deposits and others and offset by the 16% y-o-y drop in current accounts savings accounts (CASA).
As at Dec 31, 2022, total non-performing loans (NPL) stood at $4.76 billion with an NPL ratio of 1.1%, down by 0.2 percentage points y-o-y.
The bank’s non-performing assets (NPA) stood at $5.13 billion, down 0.8% q-o-q and 12.4% y-o-y.
As at Dec 31, 2022, DBS’s Common Equity Tier-1 ratio (CET-1) ratio stood at 14.6%, up 0.2 percentage points y-o-y and 0.8 percentage points q-o-q from profit accretion, a decline in risk-weighted assets and currency effects.
Leverage ratio stood at 6.4%.
During the year, DBS’s liquidity coverage ratio stood at 146% while its net stable funding ratio stood at 117%.
DBS's earnings per share (EPS) stood at $3.15 for the FY2022. Its net book value per share stood at $21.17.
Cash and cash equivalents as at Dec 31, 2022, stood at $43.98 billion.
The board has proposed a final dividend of 42 cents per share, six cents higher than its previous payment, bringing the total payout for the FY2022 to $2 per share. The board has also proposed a special dividend of 50 cents per share given its “strong capital base”.
“The record return on equity of 17% for the fourth quarter and 15% for the full year reflect the benefit of higher interest rates as well as significant structural gains from our decade-long transformation initiatives,” says DBS CEO Piyush Gupta.
“The commercial book total income growth of 21% for the full year and 43% for the fourth quarter attest to the strength of our franchise,” he adds.
Further to his statement, Gupta notes the bank’s “healthy” business pipelines and “robust”, adding that he expects “confidence to return to markets in the coming year as interest rate increases ease and China reopens”.
Shares in DBS closed 11 cents higher or 0.31% up at $36.03 on Feb 10.
