DBS Group Holdings D05 has reported a net profit – or earnings – of $2.69 billion for the 2QFY2023 ended June 30, 48% higher than the net profit of $1.82 billion in the same period the year before. The bank’s return on equity (ROE) stood at 19.2% for the quarter. The quarter’s net profit and ROE stood at a new high for the bank.
For the 1HFY2023, the bank’s net profit rose by 45% y-o-y to $5.26 billion, marking another record. 1HFY2023 ROE stood at 18.9%. Including a one-time item of $60 million for the integration costs of Citibank Taiwan, the bank's net profit stood at $5.20 billion for the 1HFY2023.
Earnings per share (EPS) for the 2QFY2023 and 1HFY2023 stood at $4.13 and $4.06 respectively.
In the 2QFY2023, the bank’s total income rose by 35% y-o-y to $5.05 billion and exceeding the $5 billion mark for the first time.
Commercial book total income, which excludes treasury markets trading income, rose by 40% y-o-y to $4.87 billion due to broad-based growth.
Commercial book net interest income (NII) surged by 54% y-o-y to $3.58 billion as net interest margin (NIM) rose by 96 basis points (bps) y-o-y and 12 bps q-o-q.
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Net fee and commission income was up by 7% y-o-y to $823 million, which is the bank’s first y-o-y increase in six quarters, led by wealth management and cards.
Treasury markets sales and other income rose by 21% y-o-y to $464 million.
Meanwhile, DBS’s treasury markets trading income fell by 34% y-o-y to $177 million due to higher funding costs.
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NII under the bank’s treasury markets trading income stood at a loss of $148 million compared to the $134 million gain in the 2QFY2022.
This was mitigated by non-interest income of $325 million, which surged by 138.9% y-o-y.
During the quarter, the bank’s allowances for credit and other losses stood at $72 million, up from $57 million in the corresponding period the year before.
The cost-to-income ratio improved by six percentage points to 38%.
1HFY2023
For the 1HFY2023, DBS’s net profit rose by 45% y-o-y to another record high of $5.26 billion. ROE for the six-month period stood at 18.9%.
Total income rose by 34% y-o-y to $9.98 billion thanks to higher commercial book NIM, card fees and treasury customer income. This was offset by lower treasury markets trading income.
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Commercial book total income for the 1HFY2023 rose by 42% y-o-y to $9.54 billion. NII was up by 61% y-o-y to $6.97 billion. NIM rose by 100 bps to 2.75%. Deposits fell by 2% with a decline in current account savings account (CASA) deposits and offset by growth in fixed deposits (FDs).
Net fee and commission income inched up by 1% y-o-y to $1.67 billion.
Treasury markets sales and other income rose by 22% y-o-y to $896 million.
Treasury markets trading income fell by 36% y-o-y to $446 million due to higher funding costs.
NII fell to a loss of $261 million from $316 million previously while non-interest income rose by 84% y-o-y to $707 million.
During the 1HFY2023, DBS took general provisions (GP) of $57 million.
As at June 30, the bank’s allowance coverage stood at 127%. Non-performing assets stood little changed q-o-q at $4.99 billion. DBS’s non-performing loan (NPL) ratio fell by 0.2 percentage points y-o-y and stood unchanged q-o-q at 1.1%.
DBS’s loan-to-deposit (LDR) ratio stood at 80% while its liquidity coverage ratio (LCR) stood at 146% as at end-June.
As at the same period, the bank’s leverage ratio stood at 6.5% while its common equity tier 1 (CET-1) ratio stood at 14.1%, down 0.1 percentage points y-o-y and down 0.3 percentage points q-o-q.
Cash and cash equivalents as at June 30 stood at $34.9 billion.
The bank has declared an interim quarterly dividend of 48 cents per share, up 6 cents from its previous payout and brings its dividend for the 1HFY2023 to 90 cents per share. The interim dividend will be paid out on or around Aug 24.
“We achieved another set of record results as second-quarter and first-half earnings reached new highs with return on equity at 19%. The commercial book benefited from higher interest rates and broad-based growth in non-interest income activities, which was moderated by higher funding costs for treasury markets. During the quarter, we commenced work to strengthen the resilience of our technology while awaiting completion of the independent review into the recent digital disruptions,” says DBS CEO Piyush Gupta.
“While there is some macroeconomic uncertainty, our prospects for the rest of the year are anchored on a franchise with a proven ability to capture business opportunities. Our longstanding prudence in building general allowance reserves and maintaining strong capital ratios will position us well to withstand headwinds,” he adds.
Shares in DBS closed 56 cents lower or 1.63% down at $33.84 on Aug 2.
