DBS first-quarter total income rises 13%, crossing SGD 4 billion for the first time; profit before allowances up 20% to new high
Singapore, Hong Kong, Indonesia, India, China, Taiwan, Regional.30 Apr 2020
General allowances of SGD 703 million pre-emptively taken for uncertainty due to pandemic, resulting in 29% decline in first-quarter net profit to SGD 1.17 billion
Singapore, Hong Kong, Indonesia, India, China, Taiwan, Regional, 30 Apr 2020 - DBS Group reported net profit of SGD 1.17 billion for first-quarter 2020, a 29% decline from a year ago, as it pre-emptively set aside a further SGD 703 million of general allowances for risks arising from the ongoing Covid-19 pandemic. The charge increased the amount of general allowance reserves by 29% to SGD 3.23 billion to fortify the balance sheet.
Total income grew 13% from a year ago to a new high of SGD 4.03 billion. Business momentum was healthy with broad-based growth in non-trade corporate loans and fee income. Gains from investment securities also contributed to the increase in total income.
Net interest income increased 7% from a year ago and 2% from the previous quarter to SGD 2.48 billion. Loans grew 1% or SGD 3 billion in constant-currency terms from the previous quarter to SGD 369 billion. Non-trade corporate loans grew 5% from drawdowns in Singapore and Hong Kong, which were offset by declines in trade loans and wealth management customer loans. Net interest margin was stable from the previous quarter at 1.86%. While the US Fed cut policy rates to near-zero in March, Libor interbank rates were resilient due to stressed funding market conditions, which buffered net interest margin.
Fee income grew 14% from a year ago to a new high of SGD 832 million. The growth was led by a 31% increase in wealth management fees, a 17% rise in loan-related fees, and a 64% increase in investment banking fees. Card fees declined 8% due to lower transactions across the region.
Other non-interest income increased 39% from a year ago to SGD 712 million.
Expenses rose 4% from a year ago to SGD 1.56 billion. Compared to the previous quarter it fell 3% from lower staff costs. The positive jaw of nine percentage points compared to a year ago and 19 percentage points compared to the previous quarter lowered the cost-income ratio to 39%. Profit before allowances grew 20% to SGD 2.47 billion.
Total allowances of SGD 1.09 billion were taken to accelerate the build-up of reserves. Two-thirds of the amount or SGD 703 million were for general allowances to anticipate a deeper and more prolonged economic impact from the pandemic. The remaining SGD 383 million was for specific allowances, mainly for new exposures recognised as non-performing during the quarter.
Non-performing assets rose 14% from the previous quarter to SGD 6.59 billion, with two percentage points of the increase due to currency effects. The NPL rate rose from 1.5% in the previous quarter to 1.6%. Total allowance reserves increased 21% to SGD 6.08 billion and allowance coverage was at 92%. When collateral valued at SGD 3.08 billion was taken into account, allowance coverage was at 173%.
Liquidity remained healthy. Deposits recorded the highest quarterly increase, rising 7% or SGD 30 billion in constant-currency terms from the previous quarter to SGD 445 billion. A majority of the growth was from corporate customers. Deposits from wealth management and retail customers also increased as they shifted from investments to cash. The loan-deposit ratio declined from 89% in the previous quarter to 83%. The liquidity coverage ratio of 133% and net stable funding ratio of 112% were both above regulatory requirements.
The Common Equity Tier-1 ratio declined 0.2 percentage points from the previous quarter to 13.9%. The ratio was above the group’s target operating range as well as regulatory requirements. The leverage ratio of 6.9% was more than twice the regulatory minimum of 3%.
The Board declared a quarterly dividend of 33 cents per share, unchanged from the previous quarter.
DBS CEO Piyush Gupta said, “Our record operating performance in the first quarter has given us a head start to face the challenges of the coming year. While the economic outlook remains uncertain and credit risks have increased, the digital investments we have made have strengthened the resilience and efficiency of our franchise and we remain committed to serving our customers. We will maintain a solid balance sheet with ample capital, liquidity and loss allowance reserves that give us strong buffers to absorb external shocks.”
About DBS
DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank’s “AA-” and “Aa1” credit ratings are among the highest in the world.
Recognised for its global leadership, DBS has been named “World’s Best Bank” by Euromoney, “Global Bank of the Year” by The Banker and “Best Bank in the World” by Global Finance. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for 11 consecutive years from 2009 to 2019.
DBS provides a full range of services in consumer, SME and corporate banking. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. DBS is committed to building lasting relationships with customers, and positively impacting communities through supporting social enterprises, as it banks the Asian way. It has also established an SGD 50 million foundation to strengthen its corporate social responsibility efforts in Singapore and across Asia.
With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. The bank acknowledges the passion, commitment and can-do spirit in all our 28,000 staff, representing over 40 nationalities. For more information, please visit www.dbs.com.
Total income grew 13% from a year ago to a new high of SGD 4.03 billion. Business momentum was healthy with broad-based growth in non-trade corporate loans and fee income. Gains from investment securities also contributed to the increase in total income.
Net interest income increased 7% from a year ago and 2% from the previous quarter to SGD 2.48 billion. Loans grew 1% or SGD 3 billion in constant-currency terms from the previous quarter to SGD 369 billion. Non-trade corporate loans grew 5% from drawdowns in Singapore and Hong Kong, which were offset by declines in trade loans and wealth management customer loans. Net interest margin was stable from the previous quarter at 1.86%. While the US Fed cut policy rates to near-zero in March, Libor interbank rates were resilient due to stressed funding market conditions, which buffered net interest margin.
Fee income grew 14% from a year ago to a new high of SGD 832 million. The growth was led by a 31% increase in wealth management fees, a 17% rise in loan-related fees, and a 64% increase in investment banking fees. Card fees declined 8% due to lower transactions across the region.
Other non-interest income increased 39% from a year ago to SGD 712 million.
Expenses rose 4% from a year ago to SGD 1.56 billion. Compared to the previous quarter it fell 3% from lower staff costs. The positive jaw of nine percentage points compared to a year ago and 19 percentage points compared to the previous quarter lowered the cost-income ratio to 39%. Profit before allowances grew 20% to SGD 2.47 billion.
Total allowances of SGD 1.09 billion were taken to accelerate the build-up of reserves. Two-thirds of the amount or SGD 703 million were for general allowances to anticipate a deeper and more prolonged economic impact from the pandemic. The remaining SGD 383 million was for specific allowances, mainly for new exposures recognised as non-performing during the quarter.
Non-performing assets rose 14% from the previous quarter to SGD 6.59 billion, with two percentage points of the increase due to currency effects. The NPL rate rose from 1.5% in the previous quarter to 1.6%. Total allowance reserves increased 21% to SGD 6.08 billion and allowance coverage was at 92%. When collateral valued at SGD 3.08 billion was taken into account, allowance coverage was at 173%.
Liquidity remained healthy. Deposits recorded the highest quarterly increase, rising 7% or SGD 30 billion in constant-currency terms from the previous quarter to SGD 445 billion. A majority of the growth was from corporate customers. Deposits from wealth management and retail customers also increased as they shifted from investments to cash. The loan-deposit ratio declined from 89% in the previous quarter to 83%. The liquidity coverage ratio of 133% and net stable funding ratio of 112% were both above regulatory requirements.
The Common Equity Tier-1 ratio declined 0.2 percentage points from the previous quarter to 13.9%. The ratio was above the group’s target operating range as well as regulatory requirements. The leverage ratio of 6.9% was more than twice the regulatory minimum of 3%.
The Board declared a quarterly dividend of 33 cents per share, unchanged from the previous quarter.
DBS CEO Piyush Gupta said, “Our record operating performance in the first quarter has given us a head start to face the challenges of the coming year. While the economic outlook remains uncertain and credit risks have increased, the digital investments we have made have strengthened the resilience and efficiency of our franchise and we remain committed to serving our customers. We will maintain a solid balance sheet with ample capital, liquidity and loss allowance reserves that give us strong buffers to absorb external shocks.”
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About DBS
DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank’s “AA-” and “Aa1” credit ratings are among the highest in the world.
Recognised for its global leadership, DBS has been named “World’s Best Bank” by Euromoney, “Global Bank of the Year” by The Banker and “Best Bank in the World” by Global Finance. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for 11 consecutive years from 2009 to 2019.
DBS provides a full range of services in consumer, SME and corporate banking. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. DBS is committed to building lasting relationships with customers, and positively impacting communities through supporting social enterprises, as it banks the Asian way. It has also established an SGD 50 million foundation to strengthen its corporate social responsibility efforts in Singapore and across Asia.
With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. The bank acknowledges the passion, commitment and can-do spirit in all our 28,000 staff, representing over 40 nationalities. For more information, please visit www.dbs.com.
