DBS net profit up 4% to S$2.8 billion in Q2, beats forecast

SINGAPORE: Singapore's biggest bank DBS posted on Wednesday (Aug 7) a rise of 4 per cent in second-quarter net profit from a year earlier, boosted by stronger total income, with fee income at a record. 

Its net profit for the quarter rose to S$2.8 billion (US$2.1 billion), beating the mean estimate of S$2.71 billion from five analysts, according to LSEG data.

Its return on equity declined to 18.2 per cent during the quarter, from 19.2 per cent in the same period of 2023, while its total income increased by 9 per cent to S$5.48 billion.

"Commercial book net interest income rose from balance sheet growth and a slightly higher net interest margin, fee income was at a record, and treasury customer sales remained strong," it said.

"Markets trading income was also higher. The cost-income ratio was 40 per cent and profit before allowances rose 6 per cent to S$3.31 billion. Compared to the previous quarter’s record, net profit was 5 per cent lower."

DBS's net interest margin, a key profitability gauge, dropped to 2.14 per cent during the quarter from 2.16 per cent a year earlier.

The bank bumped up its second-quarter dividend, giving 54 cents per share compared with 44 cents in the same quarter last year.

DBS shares were up 3.6 per cent at S$33.94 as of 1.40pm, having been up 1 per cent at S$33.09 at the end of morning trade.

LOOKING AHEAD

The bank flagged more uncertainty ahead but said that net profit growth for 2024 was expected to be in the mid-to-high single digits.

DBS' results rounded up a strong second-quarter earnings season for Singapore banks, as more inflows and trading by wealthy clients ahead of anticipated rate cuts boost their wealth businesses.

"While recent market volatility and ongoing geopolitical tensions have resulted in heightened uncertainty, we have built resilience against the risks of an economic slowdown and lower interest rates," DBS CEO Piyush Gupta said in a statement.

Gupta maintained most of the outlook guidance for this year, saying group net interest income growth was expected to be in the mid-single digits this year, while commercial book non-interest income growth was seen in the mid-to-high teens.

Total income growth is anticipated to be a high single digit, with a cost-income ratio of around 40 per cent and a specific allowance of 10 to 15 basis points, lower than the 17 to 20 basis points projected in May, according to slides for a presentation by Mr Gupta on the results.

Singapore has benefited from strong inflows of wealth into Asia due to its political stability, low taxes and policies favourable towards family offices and trusts.

That showed up in DBS' result, with a 24 per cent rise in wealth assets under management to a record S$396 billion. Its wealth management segment income rose 19.6 per cent to S$1.29 billion in the quarter.

In a departure from tradition, the bank announced its financial results during the mid-day trading break on Wednesday rather than before the market open.

Its media briefing on the results will also be held this evening instead of immediately after their release, as is typically the case. 

The bank had previously said in a bourse filing dated Jul 30 that its second-quarter financial results would be released after the market closes on Wednesday. It then changed the timing in a bourse filing dated Aug 2.

The results come amid speculation about a leadership change at DBS. The Business Times published two articles on Tuesday on the topic of succession at the bank, with the financial daily reporting that many analysts in Singapore have been discussing when Mr Gupta will step down as its CEO.

Gupta has been at the helm of DBS as group CEO and director since 2009. Before joining the bank, he spent 27 years at Citigroup, ending his time there as its CEO for Southeast Asia, Australia and New Zealand.