DBS first-quarter earnings rise 19% to SGD617
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Net interest and fee incomes at new highs on continued business volume growth
SINGAPORE, 4 May 2007 - DBS Bank today reported net earnings of SGD617
million for the first quarter, up 19% from a year ago and 11% from the
previous quarter. The better performance was underpinned by broad-based
income growth as sustained expansion in DBS' customer franchise propelled
net interest and fee incomes to record quarter levels. Trading income
performed better than recent quarters as a result of higher customer
flows and favourable trading opportunities.
Net interest income up 15% as loans grow 20% from year ago
Net interest income rose 15% from a year ago and 5% from the previous
quarter to SGD974 million, primarily due to higher asset volumes.
Customer loans rose 20% from a year ago and 9% from the previous quarter
to SGD94.3 billion, led by corporate borrowing in Singapore and the
region. Singapore housing loans grew for a third successive quarter
as the number of new loan applications and the amount of loan disbursements
continued to expand. With customer loans rising faster than customer
deposits, the loan-deposit ratio climbed to 69% from 66% in both comparative
Net interest margins were 2.21%, rising three basis points from the
previous quarter a result of higher loan yields and lower deposit costs
in Singapore, although these were partially offset by narrower spreads
between prime lending rates and funding costs in Hong Kong.
Non-interest income higher from both fee and trading activities
Fee income rose 18% from a year ago and 2% from the previous quarter
to SGD309 million. The growth in fees during the quarter was led by
loan syndication and stockbroking activities. Wealth management fees
also increased as a result of higher sales of unit trusts which rose
34% from the previous quarter to SGD1.24 billion.
Other non-interest income was better compared to recent quarters. Net
trading income from trading businesses amounted to SGD169 million, compared
to SGD123 million a year ago and SGD68 million in the previous quarter.
There was particularly strong demand from corporate and SME customers
for products to hedge their foreign exchange risks during the quarter.
Gains from sales of debt and equity investment securities were also
higher during the quarter, amounting to SGD121 million compared to SGD38
million a year ago and SGD92 million in the previous quarter.
Cost-income ratio falls to 43%
Expenses rose 17% from a year ago and 5% from the previous quarter to
SGD658 million. As in recent quarters, the largest increase was from
staff costs, which rose 20% from a year ago and 18% from the previous
quarter as a result of higher salary base and bigger bonus accruals
in line with the Group’s better performance. Computerisation costs were
22% above a year ago due to higher charges for major ongoing projects,
but they were 7% below the previous quarter. As income rose more than
costs, the cost-income ratio fell to 43% from 44% a year ago and 45%
in the previous quarter.
Asset quality improves further
The non-performing loan rate declined to 1.5% from 2.1% a year ago and
1.7% in the previous quarter. The amount of total non-performing assets
(including debt securities and contingent liabilities) fell 17% from
a year ago and 5% from the previous quarter to SGD1.46 billion.
Specific allowances for loans fell to SGD1 million for the quarter
as new charges were offset by write-backs in a benign credit environment.
This compared with a charge of SGD40 million a year ago and SGD59 million
in the previous quarter. With an expanded loan base and higher off-balance
sheet exposure, DBS took general allowances amounting to SGD102 million,
compared with SGD14 million a year ago and SGD11 million in the previous
Total cumulative allowances amounted to 125% of total non-performing
assets, the highest in DBS' history, compared to 100% a year ago and
115% in the previous quarter.
Return on equity rose to 13.0% from 12.2% a year ago and the previous
quarter, while return on assets improved to 1.21% from 1.14% a year
ago and 1.13% in the previous quarter.
The capital adequacy ratio stood at 13.6%, with the tier-1 ratio at
9.6%, compared with 14.5% and 10.2% respectively in the previous quarter
as risk-weighted assets increased with a higher loan base.
DBS Vice-Chairman and CEO Jackson Tai said, "Our Asia customer
franchise delivered yet another quarter of consistent growth, even in
the face of strong margin pressure. Our results were encouraging across
businesses and geography, led by higher loan volumes, stronger treasury
results and continued growth in fees. We were disciplined in keeping
costs in line with the rise in operating income, resulting in higher
returns on equity and assets to our shareholders."
The Board declared a dividend of 20 cents per share, unchanged from
the previous quarter but 18% higher than the 17 cents per share paid
a year ago.
Headquartered in Singapore, DBS is one of the largest financial services groups in Asia with operations in 15 markets. The largest bank in Singapore as measured by assets, and a leading bank in Hong Kong, DBS' "AA-" and "Aa2" credit ratings are among the highest in the Asia-Pacific region. DBS has leading 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 China, India, Indonesia, Malaysia, Thailand and The Philippines. More information about DBS Group Holdings and DBS Bank can be obtained from our website www.dbs.com.