DBS Q4 net profit rises 10% to S$1.32b; sees high single-digit income growth for 2019

DBS Group Holdings reported a 10 per cent increase in net profit after one-off items to S$1.32 billion for the fourth quarter, up from S$1.19 billion the year before. While business momentum remained healthy, results were "dampened" by weakness in treasury markets income, the bank said in a regulatory announcement on Monday morning before trading opened.

Annualised earnings per share (EPS) stood at S$2.01 for the quarter, up from S$1.85 the year before. Meanwhile, net book value was at S$18.12, up from S$17.85 the year before.

The company is giving a final dividend of 60 cents per share, bringing the full-year payout to S$1.20 per share. This is lower than last year's total payout of S$1.43, which was boosted by a special dividend of 50 Singapore cents.

DBS shares were up $0.41 or 1.65 per cent to S$25.20 as at 11:30am.

Total income for the quarter was at S$3.25 billion, up 6 per cent from S$3.06 billion the year before. Net interest income was at S$2.33 billion, up 11 per cent from S$2.10 billion the year before. The bank saw net interest margin increasing by nine basis points to 1.87 per cent on the back of higher interest rates in Singapore and Hong Kong.

Total expenses were at S$1.50 billion for the quarter, up 11 per cent from S$1.36 billion the year before.

The combined income of consumer banking/wealth management and institutional banking rose 16 per cent from a year ago to S$2.95 billion. Treasury markets income fell substantially against both periods, the company said.

On a full-year basis, net profit rose 28 per cent to S$5.58 billion after one-off items, up from S$4.37 billion the year before. EPS was at S$2.15, up from S$1.69 the year before, while net book value was at S$18.12, up from S$17.85 the year before. (see amendment note)

Total income for the year was at S$13.2 billion, up 11 per cent from S11.9 billion the year before. Net interest income was at around S$8.96 billion, up 15 per cent from S$7.79 billion the year before. Net interest margin was at 1.85 per cent, up from 1.75 per cent the year before.

Loans grew 6 per cent in constant-currency terms to S$345 billion. Non-trade corporate loans increased 12 per cent from steady broad-based growth across the region through the year, said DBS. Consumer loans rose 3 per cent, with a softening in the second half due to property cooling measures in the Singapore residential market and volatile financial markets, said the bank. Trade loans declined 6 per cent as maturing exposures were not replaced due to unattractive pricing, it added.

Total expenses were at S$5.80 billion for the year, up 13 per cent from S$5.13 billion the year before.

For 2019, DBS CEO Piyush Gupta expects high single-digit income growth on the back of mid-single-digit loan growth and continued net interest margin improvement. Noting that return on equity of 12.1 per cent for 2018 was near the historical high of 2007 when interest rates were twice the levels today and capital requirements less stringent, he said he expects continued ROE improvement this year.

He added: "The structural improvements we have made to the profitability of our franchise - a shift towards higher-returns businesses, deeper customer relationships and more nimble execution - put us in good stead to navigate the challenges of the coming year."

Amendment note:

An earlier version of this article incorrectly stated that DBS's full year net profit after one-off items was S$5.63 billion. It is in fact $5.58 billion. The article above has been revised to reflect this.


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