DBS Group Holdings Ltd’s Latest Earnings: 7 Quick Things to Learn from Management

DBS Group Holdings Ltd (SGX: D05)  is one of the cool companies in Singapore that shares webcasts and/or transcripts of their earnings presentations.

In late October 2016, DBS Group announced its results for the third quarter of 2016. I had recently spent some time going through the webcast for the company’s earnings presentation and noted down seven useful pieces of information for investors.

As a quick background, DBS Group is one of the three major banks based out of Singapore. It is a leading financial services group in Asia, with 280 branches across 18 markets.

With that, here are my notes:

  1. Chng Sok Hui, DBS Group’s chief financial officer, kicked off the meeting with an overview of the bank’s performance. She said that DBS Group had achieved a strong operating performance for the first nine months of 2016. Chng also mentioned that the bank achieved both net interest income growth and non-interest income growth.
  2. Digitisation was a buzzword during the earnings presentation. Chng said that DBS Group’s costs fell 5% year-on-year in the third quarter due to past investments to digitise the bank. She added that DBS Group’s cost to income ratio improved to 43%, down from 45% a year ago. DBS Group expects to end the year with a cost to income ratio of between 43% and 44%. Furthermore, Chng noted that DBS Group’s underlying headcount declined slightly, even as business volumes increased.
  3. DBS Group’s net interest margin (NIM) came in at 1.77% at the end of the third quarter, a step back from the high of 1.87% recorded a quarter ago. The decline was in line with lower Singapore-dollar interest rates, according to Chng. Despite the decline, DBS Group reiterated its expectation that its NIM for 2016 should exceed last year’s rate of 1.77%.
  4. For the third quarter, consumer loans rose by 2% year-on-year in constant currency terms. The increase was from Singapore housing loans and DBS Group estimates that it has a 28% market share. Non-trade corporate loans grew 1% while trade loans were little changed.
  5. Fee income for the third quarter rose by 19% year-on-year with broad-based growth. Wealth management fees soared 47% from a year ago. Card fees rose 15% during the same period while investment banking fees were up 74% year-on-year. Elsewhere, transaction banking fees also climbed 11%.
  6. For the first nine months of 2016, total institutional banking’s income (IBG) was $3.96 billion. IBG’s profit before tax was $1.69 billion, a 28% decline due to the specific allowances taken for Swiber Holdings Limited (SGX: BGK). Total consumer banking and wealth management (CBG) income was $3.20 billion while profit before tax was $1.38 billion.
  7. Chng also said that the assets under management (AUM) for DBS Group’s wealth management segment rose 16% to $159 billion, putting the bank among the top five in the Asia Pacific region. The wealth management segment’s AUM is expected to further increase by $23 billion to $182 billion, after DBS Group’s recent acquisition of ANZ’s wealth and retail portfolio.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.