DBS Full-Year 2004 Earnings Almost Double to Cross $2 Billion
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Fourth-quarter profits rise 10% to $321 million;
Customer loans expand 20% over eight consecutive quarters of growth
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FULL-YEAR DIVIDEND RATE RISES 33% TO 40 CENTS PER SHARE
SINGAPORE, February 18 2005 - DBS Group Holdings today reported a 97% increase
in net earnings for full-year 2004 to a record $2.02 billion. Net
profits in the fourth quarter rose 10% to $321 million.
The full-year performance was augmented by $497 million in one-time
gains recorded in the second quarter. Excluding these gains, net
profits of $1.52 billion from continuing operations were still the
highest ever and represented a 48% rise over the whole of 2003.
It surpassed the previous record of $1.39 billion set in 2000. Return
on equity was the highest in four years at 12.7%.
DBS Bank (Hong Kong)'s full year net profits rose 27% to $534 million
as operating income grew 4% and provision charges fell 47%.
Fourth-quarter earnings were supported by continued loan growth
and write-backs in provisions for investment securities, offsetting
lower treasury income that resulted from sluggish market conditions
DBS Vice Chairman and CEO Jackson Tai said: "Leaving aside the
one-time gains, the drive towards record net earnings started more
than eight quarters ago when we dedicated ourselves to growing recurring
income from our customer franchise, including that from our consumer
and SME loan book."
"Strong loan growth and our broad base of fee income helped
cushion the slowdown in market activity that affected many financial
institutions in the latter part of last year. Our larger asset base,
more diversified business platform, and a continued strong pipeline
of business will support DBS' growth, whether from our twin hubs
of Singapore and Hong Kong or from our growing presence in Greater
China and the rest of South and Southeast Asia."
Net interest income declines marginally, loans continue
Fourth-quarter net interest income declined 1% from the previous
quarter to $636 million but was 1% higher compared to the fourth
quarter of 2003. Net interest margins eased eight basis points from
1.83% in the third quarter to 1.75%, mainly attributable to the
costs of a growing deposit base in Singapore and higher borrowing
costs in general in Hong Kong. In addition, short-term, interbank-pegged
deposit rates rose faster than loan yields. Additional funding expenses
were also incurred by higher carrying costs for subordinated debt
including a US$750 million issue that closed during the quarter.
Loans grew 4% during the quarter to $69.7 billion. The expansion
was led by corporate, SME and consumer loans in Singapore, as well
as corporate and SME loans in Hong Kong and the region.
For the whole of 2004, DBS' loan book grew 8%, with margins stable
at 1.79% while full-year net interest income rose 8% to $2.57 billion.
The loan-deposit ratio was 62% compared to 60% in December 2003.
Adjusting for the deconsolidation of DTDB, loans rose 13% during
the year and net interest income by 10%.
Fee income climbs 15% for full year from all-round business
Fourth-quarter fee income was stable at $249 million compared to
a year ago as well as the previous quarter. Against fourth quarter
2003, a drop in stockbroking revenues and loan-related fees was
compensated by higher income from investment banking and wealth
Sales of wealth management products slowed in the fourth quarter
as uncertainties in the financial markets and prospects of a slowdown
in the global economy dampened investors' sentiment.
Sales of unit trusts and treasury products for the fourth quarter
totalled $1.80 billion, down 19% from $2.22 billion in the third
quarter. Compared to 2003, total sales for last year were flat at
For the full year, fee income rose 15% to $1.01 billion with increases
chalked up in almost all categories. Fees from investment banking
rose 25% to $104 million, trade and remittances were up 15% to $128
million, loan-related income was up 18% to $183 million, stockbroking
grew 17% to $198 million, and wealth management jumped 47% to $132
Fourth-quarter net gain on treasury activities of $93 million fell
23% from a year ago and 36% from the previous quarter due to the
year-end slowdown in customer flows and a further flattening of
the yield curve amid rising interest rates. For the full year, net
gain on treasury activities fell 9% to $590 million.
Operating expenses rise 10% on higher wage and advertising
Operating expenses for the fourth quarter increased 10% from the
previous year to $530 million. Wage costs for the quarter rose 17%
to $253 million as a result of higher bonus accruals and headcount.
Additional expenses were also incurred for advertising and promotions
for consumer banking products both in Singapore and Hong Kong.
For the full year, operating expenses of $2.01 billion were 9% higher
than in 2003. The cost-income ratio (excluding one-time gains) rose
from 44% in 2003 to 45%. Headcount increased 10% to 11,454 and wage
costs by 15% to $953 million compared to 2003 (after adjusting for
the deconsolidation of DTDB) but staff levels remained 9% below
the peak in 2001. A $25 million or 9% rise in technology costs was
offset by lower occupancy costs.
NPLs fall to 2.5% with provision coverage at 89%
NPLs fell to 2.5% of total loans compared to 5.2% in December 2003.
Total non-performing assets, including non-performing debt securities
and contingent liabilities, amounted to $1.92 billion, compared
to $3.78 billion in December 2003. 71% of non-performing assets
were classified as sub-standard, the least severe category.
A net specific provision write-back of $17 million was made during
the quarter. It included a $53 million write-back for investment
securities as better economic conditions resulted in improved valuations.
In addition, there was a net general provision write-back of $14
million during the quarter, reflecting the implementation of a transitional
framework for general provisions place ahead of the adoption of
Basle II. The general provision write-back was also in line with
recently released guidelines from the Monetary Authority of Singapore.
Provision coverage for non-performing assets, including debt securities
and contingent liabilities, stood at 89% compared to 63% in December
The capital adequacy ratio (CAR) stood at 15.8%, with the tier-1
ratio at 11.3%. Both ratios were above the minimum required by MAS.
The tier-2 ratio of 4.5% included US$750 million of subordinated
debt from October 2004.
The Board of Directors declared a final dividend of 22 cents per
share, which together with the interim payout of 18 cents per share
brings the full dividend rate to 40 cents. This is a 33% increase
over the 30 cents per share paid out for full-year 2003.
Headquartered in Singapore, DBS is one of the largest financial services groups
in Asia. The largest bank in Singapore and the fifth largest banking
group in Hong Kong as measured by assets, DBS has dominant positions
in consumer banking, treasury and markets, asset management, securities
brokerage, equity and debt fund raising. Beyond the anchor markets
of Singapore and Hong Kong, DBS serves corporate, institutional
and retail customers through its operations in Thailand, Malaysia,
Indonesia, India and The Philippines. In China, the bank has branches
and representative offices in Shanghai, Beijing, Guangzhou, Shenzhen,
Fuzhou, Tianjin and Dongguan. The Bank's credit ratings are among
the highest in the Asia-Pacific region. More information about DBS
Group Holdings and DBS Bank can be obtained from our website www.dbs.com.