As a retail investor, my work does not stop after I have invested in a company – I continue to keep track of its latest updates, particularly when it publishes its quarterly results, and also its annual report.

DBS Group Holdings Limited (SGX:D05), one of Asia’s leading banks, and a long-term investment of mine, published its annual report for the financial year 2020 ended 31 December 2020 yesterday (08 March 2020.)

I have gone through the report, summarised the most important points (in my opinion) to take note of, and in this post, you’ll find all the notes I’ve taken (which I am sharing for the benefit of those who do not have the time to go through the report), along with information about its upcoming annual general meeting (AGM), and my personal thoughts as a shareholder of the Singapore bank to share.

Let’s begin…

Letter from the Chairman Peter Seah, and CEO Piyush Gupta

A Resilient Performance in the Face of Crisis:

  • The ongoing Covid-19 pandemic wrecked carnage on the global economy, with central banks slashing interest rates to bolster economies. As a result, DBS’ net interest margin fell 27 basis points to 1.62%.
  • Despite of this, the bank’s total income remained stable at S$14.6b, as the quality of their broad-based income, a well-constructed balance sheet, and their nimble execution cushioned against the impact of interest rate headwinds.
  • However, its net profit fell by 26% to S$4.72b due to general allowances (of S$1.71b) set aside in anticipation of rising defaults in 2021. That said, the bank expects allowances to decline in 2021, back to what they would set aside in a normalised year.

Lending Covid-19 Support:

  • Throughout the year 2020, the bank approved S$11b in loan moratoriums for companies in Singapore and Hong Kong, and another S$5b in moratoriums for residential mortgages in Singapore. It also disbursed S$5b in government risk-sharing loans for SMEs (Small and Medium Enterprises) in Singapore.
  • Free Covid-19 insurance was offered by the bank to all 5 million DBS/POSB customers and their families.
  • To ensure employee morale remained strong, the bank launched a series of programmes under the TOGETHER movement aimed at addressing the physical, emotional, and mental well-being of its people.
  • The bank also provided support for the community, with the launch of the S$10.5m ‘Stronger Together Fund’, provided 4.5 million means and care packs, in addition to medical supplies, across the region. This is on top of the S$9m (including S$2m in grants) disbursed by the bank and DBS Foundation to help social enterprises tide through the pandemic.

Becoming a Technology Company:

  • Over the past 5 years, DBS’ transformation strategy has been focused on 3 pillars:
    1. Being digital to the core: 99% of the bank’s applications are now cloud-enabled, which improved its efficiency and nimbleness; the bank is also making progress in tapping into emerging technology trends such as in the areas of 5G, Internet of Things, and public cloud.
    2. Embedding themselves in the customer journey: the bank have launched several initiatives to make banking simple, seamless, and effortless – today, new-to-bank customers in Singapore can open a banking account with the bank in just 15 clicks, or in less than 3 minutes (and this is currently the best-in-class for the industry); launch of DBS NAV Planner in April 2020 to help its customers make more informed decisions about their money, as well as the launch of SGFinDex in December 2020, which is the world’s first public-private open banking initiative, allowing the bank to reach out to a wider pool of customers in Singapore.
    3. Thinking and acting like a startup: the bank established an innovation framework and process in 2020 to allow them to innovate at scale, in addition to its efforts to continue to democratise technology skillsets among its employees.

Scaling their Businesses in Large Asian Markets:


  • Amalgamation of Lakshmi Vilas Bank (LVB) with DBS Bank India Limited (DBIL) with effect from 27 November 2020, which complemented DBS’ digibank strategy with an expanded network of 600 branches and 1,000 ATMs, an additional 2 million retail and 125,000 non-retail customers.
  • The bank expects its business in India to become profitable within 1-2 years.


  • The bank is preparing to launch DBS Securities (China) Limited, a joint-venture securities company.

Dividends for FY2021:

  • Given DBS’ strong capital position, the bank will revisit dividends paid out if and when permitted.

CEO Piyush Gupta’s Reflections

  • With the dramatic acceleration of digital consumption of goods and services, as well as the transformation of work habits as a result of the pandemic, Mr Gupta is of the view that the digitalisation of banking will accelerate even more – including the use of digital authentication, e-signatures and digital documentation, along with digital payments.
  • Covid-19 has also brought to fore the sustainability agenda, to which the bank are already advanced on their journey of responsible banking, responsible business practices, and creating social impact. Moving forward, they will continue to work to reduce their own carbon footprint (mostly from data centres and their property occupancy), as well as work with their corporate clients to facilitate their move to lower carbon intensive business models.
  • With regard to challenges arising from low interest rates and asset quality risks, Mr Gupta is of the opinion that the latter (i.e. asset quality risks) is easier to deal with, as the sharp rebound in several countries in the later part of 2020, along with confidence from the vaccine roll out, creates optimism that credit risks may not be as dire as initially forecasted.
  • Low interest rates, in Mr Gupta’s opinion, poses a more prolonged challenged as they are expected to remain in the foreseeable future, resulting in an eventual reduction in their interest income by S$2.5b to S$3.0b; However, he shared that in FY2020, the bank was able to recoup almost all of the interest rate shortfall through an increase in business volumes as both loans and deposits grew strongly, along with a record Treasury Market income, and gains in their investment portfolio (but he added that the performance of the latter two may not be repeated in 2021, as gains are dependent on market conditions.)
  • Finally, Mr Gupta added that digitalisation will bring about additional growth prospects. Also, the bank will continue to manage costs (where organic expenses for 2021 will be kept at 2019 levels), and the amalgamation of Lakshmi Vilas Bank will increase their consumer and SME customer base and strengthen their deposit franchise in India, as well as accelerate their growth trajectory in a major emerging market.

Key Financial Performances (FY2019 vs. FY2020)

FY2019FY2020% Variation
– Net Interest Income
– Net Fee & Commission
Income (S$’mil)
– Other Non-Interest
Income (S$’mil)
Total Income
Total Allowances
$703m$3,066m> +100.0%
Profit before Tax

  • Net interest income declined 5.7% to S$9.076b due to lower net interest margin (which fell by 27 basis points to 1.62%) – with the majority of interest rate declines occurring in the second and third quarter of the year (as interest rate cuts were only made in March.)
  • Net fee and commission income was little changed compared to last year, as a 14% increase in the first quarter to a quarterly record was offset by a 11% decline in the second quarter as transactions fell with lockdowns across the region. For the second half of the year, fee income was stable (compared to the previous year) as economic activity rebounded from the second quarter trough.
  • Other non-interest income jumped by 31.6% to S$2.458b (a record for the bank), due to investment gains tripling to S$963m as bond portfolios performed strongly with falling interest rates, and trading income improved to S$1.41b, the second highest on record, as treasury customer income rose to a new high.
  • Expenses fell by 1.6% to S$6.158b as general expenses such as for traveling for advertising declined.
  • Finally, allowances more than quadrupled to S$3.07b (exceeding the low-end of the S$3b to S$5b range) as the bank took a conservative approach and front-loaded the 2-year estimated credit cost by taking general allowances of S$1.71b for asset quality risks.

Notice of DBS Group Holdings Limited’s 22nd AGM

As a result of the ongoing Covid-19 pandemic, the bank will be holding its 22nd AGM online on Tuesday, 30 March 2021, at 2.00pm.

You can sign up to attend the virtual AGM here. Do take note that the deadline for registration will be on 27 March 2021, at 2.00pm. Authenticated shareholders will receive an email with the login details to attend the virtual meeting by 29 March 2021.

I have signed up to attend the bank’s upcoming AGM, and will be compiling a summary for the benefit of those who aren’t able to attend in due course.

My Closing Thoughts

It’s always a joy to read through the bank’s annual reports, for there are so much of useful information to be had. What I like most about the bank’s performance for the year is that, despite of the headwinds posed by the Covid-19 pandemic, the bank still managed to break some of its records (particularly in its net fee and commission income for the first quarter of the year, and also in its other non-interest income recorded for the year.)

Another thing I like about the bank as a shareholder is how it stood in solidarity with the nation and also with its shareholders, where all the non-executive directors who are currently in office have volunteered to take a 10% reduction in their basic retainer fees of S$100,000 for FY2020. That’s not all – the Board Chairman have also volunteered to take another 10% reduction in his Board Chairman’s fees for FY2020 (this is on top of the 10% reduction in his basic retainer fees.)

Finally, while some may have concerns over its amalgamation of the Lakshmi Vilas Bank, I remain confident that the bank will be able to meet the targets they have set.

With that, I have come to the end of my summary of DBS Group Holdings Limited’s latest FY2020 annual report, which I hope you find useful…

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Disclaimer: At the time of writing, I am a shareholder of DBS Group Holdings Limited.

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