First-quarter net profit at SGD 1.80 billion, second highest on record, underpinned by healthy business momentum, higher net interest margin and stable asset quality
The performance was moderated by a high base for wealth management and Treasury Markets activities a year ago, when buoyant market sentiment and clear market momentum had driven income from both activities to exceptional levels. As a result, total income fell 3% from a year ago to SGD 3.75 billion and net profit was 10% lower.
Compared to the previous quarter, net profit was 30% higher. Total income rose 14% from broadbased growth while expenses were 2% lower. Profit before allowances increased 30%.
Net interest income increased 4% on a day-adjusted basis from the previous quarter to SGD 2.19 billion. Net interest margin increased three basis points to 1.46% as interest rates rose. Loans grew 2% or SGD 8 billion in constant-currency terms to SGD 416 billion. Non-trade corporate loans rose 2% or SGD 6 billion led by Singapore and Hong Kong across a range of industries. Trade loans grew 5% or SGD 2 billion amidst rising commodity prices. Housing loans and wealth management loans were little changed. Compared to a year ago, net interest income rose 4%. Loan growth of 8% or SGD 30 billion more than offset the impact of a net interest margin decline of three basis points.
Deposits grew 4% or SGD 18 billion from the previous quarter and 9% or SGD 41 billion from a year ago in constant-currency terms to SGD 520 billion. Current and savings accounts accounted for 75% of customer deposits.
Net fee income fell 7% from the record a year ago to SGD 891 million as weaker market sentiment affected wealth management and investment banking. Wealth management fees fell 21% to SGD 408 million with declines in investment product sales mitigated by higher bancassurance income. Investment banking fees were also lower, by 12% to SGD 43 million, as fixed income activities fell.
Other fee income activities were higher. Loan-related fees grew 21% to SGD 144 million. Card fees rose 11% to SGD 187 million as credit and debit card spending exceeded pre-pandemic levels and travel spending picked up. Transaction service fees grew 4% to a new high of SGD 240 million led by higher cash management fees.
Compared to the previous quarter, net fee income rose 9% due to higher fees from loan-related activities, transaction banking and wealth management.
Other non-interest income declined 16% from the high base a year ago to SGD 669 million from lower trading income and lower investment gains. Compared to the previous quarter, other noninterest income doubled from higher net trading income due partly to seasonal effects in the fourth quarter.
Expenses rose 4% from a year ago to SGD 1.64 billion due to base salary increments carried out in mid-2021. Compared to the previous quarter, they were 2% lower as higher staff costs were more than offset by declines in other operating expenses. The cost-income ratio was 44%.
Asset quality was stable from the previous quarter. The NPL ratio was unchanged at 1.3%. Specific allowances amounted to SGD 167 million or 15 basis points of loans, which were in line with recent quarters when significant repayments were excluded.
There was a general allowance write-back of SGD 112 million from credit upgrades and transfers to NPA. General allowance overlays built up in prior periods were maintained. General allowance reserves remained prudent at SGD 3.75 billion, which were SGD 0.2 billion above the MAS requirement and SGD 1 billion above Tier-2 eligibility. Together with specific allowance reserves, total allowance reserves amounted to SGD 6.81 billion, resulting in an allowance coverage of 114% and of 193% after considering collateral.
Capital remained strong. The Common Equity Tier-1 ratio declined 0.4 percentage points from the previous quarter to 14.0%, which included a previously-announced temporary 0.4 percentage point impact from the digital disruption in November 2021. The leverage ratio of 6.3% was more than twice the regulatory minimum of 3%.
The Board declared a dividend of SGD 36 cents per share for the first quarter.
DBS CEO Piyush Gupta said, “First-quarter business momentum was strong and broad-based, and earnings were second only to the exceptional quarter a year ago. Geopolitical developments in recent weeks have created macroeconomic headwinds and financial market volatility. We have stress tested our portfolio and it remains resilient. While some activities such as wealth management will be affected, our overall business pipeline continues to be healthy and we will benefit significantly from interest rate increases in the coming quarters.”
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 and the world’s “Most Innovative in Digital Banking” by The Banker. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for 13 consecutive years from 2009 to 2021.
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 a 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. For more information, please visit www.dbs.com.