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DBS Group Breaks The One Billion Mark With Record Quarterly Earnings

800px-DBSBank_DesVoeuxRoadBranch_HongKongDBS Group (SGX: D05), the largest bank in South East Asia and partly owned by Singapore Sovereign wealth fund, Temasek Holdings, reported its first quarter earnings on 30th April 2014. Currently, the bank has presence in more than 16 countries. It passes a record S$ 1billion in earnings in a single quarter.

Operating Result

DBS grew its net interest income by more than 12% year on year to S$ 1,488million for the quarter. This was mainly due to the increase in its overall loan portfolio. It was also able to grow its non interest income albeit at a more modest growth of only 1% year on year, ending the quarter with S$ 510million. Most segments grew except its stockbrokering and investment banking segments, which are facing more competition pressure. Both segments dropped more than 30% in revenue year on year.

Overall, it reported a net profit before extraordinary items of S$ 1,033million, the first time the bank recorded a quarter earnings of more than S$ 1billion. Its net profit grew at a more amazing 30% from last year to S$ 1,231million, mainly due to its gain in sale of a stake in the Bank of Philippine Islands (BPI).

Its net interest margin (NIM) increased to 1.66% for the quarter, highest for the past 5 quarters. Non performing loan ratio also dropped to a new low at 1.0% even when the company slow down its loan writeoff.

Its capital structure was slightly weaker as its total capital adequacy ratio dropped from 16.3% to 15.3% since last quarter. Deposit to loan ratio remains healthy at around 84%.

The management expects a strong performance in DBS Group for the future. They are confident in the loan portfolio of the group and believe that there are many growth engines in the company including its non-interest incoming producing segments. Furthermore, they believe that a rising interest rate will benefit the group. The group ended the quarter with a net asset value per share of S$ 14.14 per share. With its closing price of S$ 16.94 at the end of 30th April 2014 trading day, it is trading at a price to book ratio of 1.2 times.