DBS Q2 profit beats forecasts to rise 45% to S$2.6 billion; declares S$0.48 dividend
Michelle Zhu
SINGAPORE’S largest lender DBS posted a net profit of S$2.6 billion for the second quarter ended June, representing a 45 per cent year-on-year increase from S$1.8 billion.
This includes integration costs of S$60 million accrued from the acquisition of Citigroup’s Taiwan consumer banking business in Q2.
Notwithstanding this one-off item, quarterly net profit would have been up 48 per cent to a record S$2.7 billion.
The latest quarter’s net profit also beat the S$2.4 billion consensus estimate from analysts polled by Bloomberg.
Net interest margin (NIM) at the group level stood at 2.16 per cent, up from 1.58 per cent in Q2 FY2022. At the commercial book level and excluding treasury markets trading income, NIM gained 96 basis points (bps) on the year, and was up 12 bps from the previous quarter to 2.81 per cent.
Total income for the quarter crossed the S$5 billion mark, with commercial book total income up 40 per cent on the year to S$4.9 billion on broad-based growth.
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Net interest income rose 54 per cent year on year to S$3.6 billion for the quarter.
Net fee income was up 7 per cent from the previous year to S$823 million, marking the first year-on-year increase in six quarters.
Wealth management fees rose 12 per cent to S$377 million from higher bancassurance and investment product sales.
In constant currency terms, loans fell 1 per cent or S$5 billion during the quarter to S$416 billion, as trade loans declined due to a general market slowdown and unattractive pricing, said the bank.
Deposits fell 3 per cent or S$14 billion in constant-currency terms to S$520 billion. This was attributed to a decline in Casa (current account and savings account) deposits.
Expenses for the quarter rose 16 per cent on the year to S$1.9 billion, mainly due to higher staff costs.
Cost-to-income ratio stood at 38 per cent, down six percentage points from the year-ago period, while the non-performing loan ratio was unchanged from the previous year at 1.1 per cent. Return on equity reached another new high at 19.2 per cent for the quarter, and at 18.9 per cent for the half-year period.
The bank declared a dividend of S$0.48 per share for Q2 FY2023, to be paid on or before Aug 24. This is up from the previous year’s Q2 dividend of S$0.36 per share.
Dividend for the first half of the fiscal year is S$0.90 per share, as opposed to the S$0.72 per share dividend declared in H1 FY2022.
For the six months ended June, the bank’s net profit was up 45 per cent to a record S$5.3 billion.
Total income grew 34 per cent to S$10 billion, as higher commercial book NIM, card fees and treasury customer income were moderated by a decline in treasury markets trading income.
The bank’s chief executive Piyush Gupta attributed the quarterly and half-year commercial book improvements to higher interest rates and broad-based growth in non-interest income activities.
He added that the bank commenced work to strengthen the resilience of its technology in Q2, while awaiting completion of an independent review into recent digital disruptions.
“While there is some macroeconomic uncertainty, our prospects for the rest of the year are anchored on a franchise with a proven ability to capture business opportunities. Our longstanding prudence in building general allowance reserves and maintaining strong capital ratios will position us well to withstand headwinds.”
Shares of DBS ended Wednesday (Aug 2) down S$0.56 or 1.6 per cent at S$33.84.
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