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10 Quick Things Investors Should Learn About DBS Group Holdings Ltd’s Latest 2017 First Quarter Earnings

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

In early May, the company released its 2017 first quarter earnings. I had recently spent time watching the webcast of DBS Group’s earnings presentation and noted down 10 things that may interest investors.

As a quick background, DBS Group is one of the three major banks based out of Singapore (it is the largest by assets) and 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 the bank achieved record earnings for the quarter, with fee income hitting a new high.

2. Total income was $2.89 billion, with what Chng described as healthy business momentum. She added that net interest income was up 3% quarter-on-quarter on a day-adjusted basis as net interest margin (NIM) rose over the same period from 1.71% to 1.74%.

3. The bigger story was in the fee income business. Chng said that broad-based growth led to a 16% year-on-year increase in fee income, with wealth management and transaction service fees leading the charge.

4. Meanwhile, DBS Group continued to gain from its digitisation efforts. Chng said that the cost to income ratio improved to 43%, one percentage point higher from a year ago. Later on, she added that expenses declined year-on-year for three quarters in a row.

5. Elsewhere, DBS Group booked a gain of $350 million from its sale of Singapore’s PWC Building. The gain was earmarked for general allowances.

6. Loans rose by 7% year-on-year to $303 billion. The gain was relatively broad-based with consumer loans rising 6% to $95 billion, non-trade corporate loans up 5% to $164 billion, and trade loans increasing 8% year-on-year to $41 billion. DBS Group maintained its guidance for mid-single digit loan growth in 2017.

7. Chng said that deposits rose to $342 billion compared to the $314 billion recorded a year ago. She added that the higher deposits was a reflection of DBS Group’s success in cash management and wealth management to increase current and saving account deposits. The Asian banking giant also had a liquidity coverage ratio of 138%, which is above the regulatory requirement of having a liquidity coverage ratio of at least 100% by 2018.

8. For the first quarter, total institutional banking (IBG) income was $1.32 billion while profit before tax was mostly unchanged at $756 million.

9. Consumer banking and wealth management (CBG) income was $1.16 billion, up 13% from a year ago. Profit before tax was $534 million. Chng said that DBS Group had grown its market share in the Singapore housing loan market.

10. Non-performing loans (NPL) was 1.4% for the reporting quarter, unchanged from the previous quarter. New non-performing assets was $523 million. This allowances include exposures in the oil and gas sector, but Chng said that this is substantially lower than the previous three quarters.

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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.