DBS Group Holdings has reported a net profit of $2.63 billion for the 3QFY2023 ended Sept 30, 18% higher y-o-y. This brings the bank’s 9MFY2023 net profit to a record $7.89 billion, 35% higher y-o-y.
Net profit including one-time items for the 3QFY2023 and 9MFY2023 stood at $2.59 billion and $7.79 billion respectively.
For the 3QFY2023, total income grew by 16% y-o-y to a record $5.19 billion from higher net interest margin (NIM) and higher commercial book non-interest income. NIM for the 3QFY2023 stood at 2.82%, up 52 basis points (bps) y-o-y and 1 bps q-o-q from higher rates.
3QFY2023 net interest income (NII) under its commercial book business rose by 23% y-o-y to $3.68 billion from higher NIM while net fee and commission income rose by 9% y-o-y to $843 million from higher wealth management, cards and loan-related fees. Loans grew by 1% q-o-q in constant currency terms to $420 billion.
The consolidation of Citi Taiwan, which took place on Aug 12, contributed $10 billion to loans and $12 billion in deposits. It also boosted DBS Taiwan’s credit card accounts by five-fold to over 3 million and tripled investment assets under management (AUM) to over $12 billion. Provisional goodwill of $936 million was recorded while one-time integration costs of $40 million were accrued in the third quarter.
Excluding Citi Taiwan, non-trade corporate loans declined 1% from higher repayments while trade loans fell 3% due to unattractive pricing. Housing and other consumer loans were 1% lower. Deposits grew 2% in constant-currency terms from the previous quarter to $531 billion due to the consolidation of Citi Taiwan.
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Treasury customers' sales and other income rose by 8% y-o-y to $499 million.
DBS’s NII under treasury markets stood at a negative $180 million, down from the $31 million in the 3QFY2022. Non-interest income rose by 45% y-o-y to $346 million.
Compared to the record in the previous quarter, net profit was 2% lower as higher income was offset by higher expenses and total allowances.
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Expenses for the 3QFY2023 rose by 12% y-o-y to $5.19 billion.
Allowances for credit and other loans rose by 21% y-o-y to $215 million. Of the amount, the bank took specific allowances of $197 million or 18 bps of loans higher than the low levels in recent quarters. The allowances were prudently taken for exposures linked to a recent money laundering case in Singapore. General allowances of $18 million were taken. Allowance coverage stood at 125% and at 216% after considering collateral.
9MFY2023 total income rose by 27% y-o-y to $15.2 billion driven by the commercial book, which rose by 33% y-o-y to $14.6 billion. 9MFY2023 NII grew by 46% y-o-y to $10.6 billion from an 82 bps expansion in NIM.
Net fee income increased by 4% y-o-y to $2.52 billion as the growth in the 2QFY2023 and 3QFY2023 more than offset the decline in the 1QFY2023.
Other non-interest income grew by 16% y-o-y to $1.4 billion.
Treasury markets income, however, fell by 37% y-o-y to $612 million for the period due to higher funding costs.
Expenses grew 14% to $5.85 billion and the cost-income ratio improved four percentage points to 39%. Profit before allowances increased by 37% y-o-y to $9.32 billion.
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Return on equity (ROE) stood at a record 18.6%.
As at Sept 30, DBS’s cost-to-income ratio improved by 4 percentage points to 39%.
Its non-performing loan (NPL) ratio stood unchanged at 1.2% while its leverage ratio stood at 6.4% as at Sept 30.
DBS’s loan-to-deposit ratio (LDR) as at Sept 30 stood at 79% while its liquidity coverage ratio (LCR) stood at 138%. Net stable funding ratio stood at 117%.
Its common equity tier 1 (CET-1) ratio stood unchanged q-o-q at 14.1%.
For the 3QFY2023, the bank has declared a dividend of 48 cents per share, bringing its total dividend for the 9MFY2023 to $1.38 per share.
“We achieved record income in the third quarter as NIM continued to expand and growth in commercial book non-interest income was sustained. The successful integration of Citi Taiwan has progressed our strategy of building meaningful scale in growth markets. As we enter the coming year, higher-for-longer interest rates will be a net benefit to earnings, while our solid balance sheet with ample liquidity, prudent general allowance reserves and healthy capital ratios will provide us with strong buffers against macro uncertainties,” says DBS CEO Piyush Gupta.
“We will also dedicate ourselves to executing the comprehensive set of measures we recently announced to address the series of digital disruptions, for which we are truly sorry. We are committed to strengthening our technology resilience and ensuring customer service reliability,” he adds.
Shares in DBS closed 63 cents higher or 1.93% up at $33.29 on Nov 3.
