DBS posts 43% rise in Q1 profit to record S$2.6 billion
DBS posted a record net profit of S$2.6 billion for its first quarter ended Mar 31, up 43 per cent from S$1.8 billion a year earlier.
The earnings beat the S$2.3 billion consensus forecast in a Bloomberg survey of three analysts.
In an earnings briefing on Tuesday (May 2), DBS chief executive Piyush Gupta said the bank had sustained growth in its net interest margins (NIM) as well as a healthy business momentum.
Total income for the quarter grew 34 per cent year on year to hit a record S$5 billion, while return on equity reached a new high of 18.6 per cent.
For its commercial book, total income was up 44 per cent year on year to S$4.7 billion.
Net interest income climbed 69 per cent to S$3.4 billion, supported by a loan growth of 3 per cent and a higher NIM. Its commercial book NIM stood at 2.69 per cent in Q1, from 1.65 per cent in Q1 2022 and 2.61 per cent in Q4 2022.
Net fee and commission income fell 4 per cent in to S$851 million, while other non-interest income rose 22 per cent to S$432 million.
Gupta said fee income growth was “what was really pleasing”.
The lender reversed the declining trend in its fee income in February and March this year, boosted by growth in investment banking, wealth management and loan-related fees.
Deposits and net new money for its wealth management segment gained from flight-to-safety inflows in March, Gupta said.
Meanwhile, DBS’ treasury markets total income fell 38 per cent year on year to S$269 million, following guidance.
The bank classified its results as “commercial book” or “treasury markets” since Q4 last year, to better reflect the performance trends of its customer franchise.
Overall, NIM rose to 2.12 per cent for the quarter, from 1.46 per cent in Q1 2022 and 2.05 per cent in Q4 2022.
Gupta also noted that that bank’s asset quality remains resilient.
DBS added S$99 million in general provisions in Q1, given the unprecedented high interest rate environment, he said.
“We’re just being abundantly prudent and cautious in case there is some stress that comes out of the system in the later part of the year,” he added.
Meanwhile, specific provisions remained low at six basis points of loans.
The bank’s non-performing loans (NPL) ratio remained constant at 1.1 – same as last quarter. This is lower than its NPL ratio in Q1 2022, which was 1.3.
Its Common Equity Tier-1 ratio fell to 14.4 per cent, from 14.6 per cent in Q4 last year.
Cost-to-income ratio improved on year to 38 per cent, from 45 per cent a year earlier, even as expenses rose 14 per cent on higher staff costs.
Looking ahead, Gupta expects business momentum will remain healthy, although he noted some pockets of moderation.
For its mortgage book in Singapore, Gupta said the lender may miss some growth targets this year given the latest property cooling measures.
He expects the measures “won’t be draconian”, however, as a significant portion of DBS’ book comprise first-time buyers, who are not impacted by the measures.
Gupta also expects some moderation in its wealth management margin financing.
Even as wealth management fees grew in Q1, the lender noted that investors have drawn down from their deposit accounts into the investment accounts instead of borrowing, he said.
DBS is guiding for loan growth of 3 per cent to 5 per cent. It previously indicated a mid single-digit growth.
It lowered its fee income growth to a high-single digit from a double-digit growth due to the banking turmoil in March.
The bank expects its full-year NIM to see a gradual decline and come in at between 2.05 per cent and 2.1 per cent.
For the quarter, annualised earnings per share stood at S$4.02, up from S$2.81 the year before.
The lender declared an interim dividend of S$0.42 per share for the period, up from S$0.36 a year earlier but unchanged from last quarter. DBS is aiming to pay an annualised ordinary dividend of S$1.68 per share for the year.
The dividends are payable on May 22 after books closure on May 10.
Shares in DBS rose 0.3 per cent to S$32.92 at the midday break on Tuesday.
