DBS first-half earnings rise 5% to record SGD 1.84 billion

Singapore, China, Hong Kong, India, Indonesia, Taiwan.01 Aug 2013

Second-quarter earnings up 10% to SGD 887 million

Singapore, China, Hong Kong, India, Indonesia, Taiwan, 01 Aug 2013 - DBS Group Holdings delivered record half-year earnings of SGD 1.84 billion for the first six months of 2013, up 5% from a year ago. Total income rose 13% to a half-year high of SGD 4.63 billion from higher loan volumes and broad-based non-interest income growth. Profit before allowances increased 15% to SGD 2.69 billion, also a half-year record. Return on equity was 11.6% compared to 11.2% for full-year 2012.

For the second quarter, net profit rose 10% from a year ago to SGD 887 million. Total income increased 19% to SGD 2.31 billion and was maintained at the record level of first-quarter 2013.

First-half performance underpinned by broad-based growth

Net interest income increased 2% to SGD 2.71 billion. Loans grew 14% or SGD 30 billion since June 2012 to SGD 235 billion from regional corporate borrowing, trade loans and Singapore consumer loans. Net interest margin declined 12 basis points from a year ago to 1.63%, with most of the impact due to lower margin in China and asset re-pricing in second-half 2012.

Non-interest income rose 33% to a half-year record of SGD 1.92 billion. Fee income increased 25% to SGD 984 million. All fee segments were higher, with wealth management rising 44% to SGD 214 million and trade and transaction services increasing 12% to SGD 271 million. Buoyant capital markets led to a doubling of investment banking fees to SGD 111 million and a 29% increase in stockbroking commissions to SGD 119 million.

Other non-interest income rose 42% to SGD 933 million as higher treasury customer flows and trading gains more than offset a decline in investment gains. Income from treasury customer flows rose 16% to SGD 578 million, accounting for 49% of total treasury income.

Total income rose 13% to SGD 4.63 billion. Expense growth was contained at 10% and the cost-income ratio improved from 43% to 42%. Profit before allowances increased 15% to SGD 2.69 billion.

Specific allowances rose to SGD 242 million or 22 basis points of loans as credit costs increased from the exceptionally low levels seen in the past two years. General allowances rose 50% to SGD 223 million in tandem with the faster loan growth.

Second-quarter earnings rise 10% from a year ago to SGD 887 million

For the second quarter, net profit rose 10% from a year ago to SGD 887 million as an increase in total income was partially offset by higher allowances.

Net interest income rose 4% to a record SGD 1.38 billion. The impact of higher loan and deposit volumes was partially offset by lower net interest margin. Non-interest income increased 49% to SGD 927 million. Fee income rose 26% to SGD 477 million as all fee segments were higher. Other non-interest income increased 86% to SGD 450 million due mainly to higher trading gains.

Total income rose 19% to SGD 2.31 billion, faster than a 13% increase in expenses to SGD 987 million. Profit before allowances increased 23% to SGD 1.32 billion. Total allowances more than doubled to SGD 245 million as both specific and general allowances rose.

Second-quarter earnings decline 7% from previous quarter

Second-quarter earnings were 7% below the previous quarter. Total income was maintained at the previous quarter’s record level as an increase in net interest income offset a decline in non-interest income.

Net interest income rose 4%, in line with loan growth of 5% or SGD 11 billion. Excluding currency effects, loans rose 4% or SGD 9 billion, with Singapore corporate loans and regional trade loans accounting for half the increase and secured consumer loans for another one-quarter. Net interest margin was stable at 1.62%.

Non-interest income fell 6% as market volatility in June contributed to lower trading gains as well as a decline in fee and commission income from investment banking, stockbroking and wealth management. Fee income from trade and transaction services and cards as well as income from treasury customer flows were maintained around the previous quarter’s levels.

Expenses were 4% higher due to increases in staff and other operating costs. Total allowances rose 10% from higher specific allowances.

Balance sheet continues to be strong

DBS’ balance sheet remained strong.

Asset quality continued to be solid with the NPL rate remaining at 1.2%, unchanged from recent quarters. The allowance coverage of non-performing assets was maintained at 141%, near the record high, and positions DBS well for any weakening in the external environment.

Liquidity remained healthy. Deposits rose 4% or SGD 11 billion during the quarter and 13% or SGD 31 billion over the past 12 months to SGD 261 billion. With deposits growing in line with loans over both periods, the loan-deposit ratio was little changed at 90%. Liquidity was supplemented by wholesale funding, including commercial papers and medium term notes.

Capital adequacy ratios continued to be comfortably above regulatory requirements, with the Common Equity Tier 1 ratio at 12.9%, Tier 1 ratio at 12.9% and total capital adequacy ratio at 15.5%.

DBS CEO Piyush Gupta said, “DBS turned in record half-year earnings, notwithstanding a normalising credit cost environment. While we expect some slowdown in the region in the short term, Asia’s long-term growth story is intact. The bank’s strong second quarter showing is testament to the strength and resilience of our franchise and we will be watchful and disciplined as we continue to entrench our position as a leading Asian bank.”

The Board declared an interim dividend of SGD 28 cents per share, unchanged from the previous half-year. The scrip dividend scheme will be applicable to the dividend. Scrip dividends will be issued at the average of the last-dealt share price on 15, 16 and 19 August 2013 to shareholders electing to receive their dividends in scrip.

About DBS

DBS - Living, Breathing Asia

DBS is a leading financial services group in Asia, with over 250 branches across 15 markets. Headquartered and listed in Singapore, DBS has a growing presence in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank's capital position, as well as "AA-" and "Aa1" credit ratings, is among the highest in Asia-Pacific. DBS has been recognised as “Asia’s Best Bank” by The Banker, a member of the Financial Times group, and “Best Managed Bank in Asia-Pacific” by The Asian Banker. The bank has also been named “Safest Bank in Asia” by Global Finance for five consecutive years from 2009 to 2013.

DBS provides a full range of services in consumer, SME and corporate banking activities across Asia. As a bank born and bred in Asia, DBS also understands the intricacies of doing business in the region’s most dynamic markets. These market insights and regional connectivity have helped to drive the bank’s growth as it sets out to be the Asian bank of choice. DBS believes that building lasting relationships with its customers is an integral part of banking the Asian way.

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 of our 18,000 staff, representing over 30 nationalities. For more information, please visit www.dbs.com.