The biggest bank in Singapore, and also a company in my long-term investment portfolio (you can check out a list of companies I have invested in here), DBS Group Holdings Limited (SGX:D05), released its business updates for the first quarter of the financial year 2021 ended 31 March 2021 last Friday (30 April 2021) before market hours.
As the bank have shifted to half-yearly reporting since last year, for the current quarter under review, the bank only presented a summary of its financial performance. However, in terms of its dividend payout, it is still paying out its shareholders on a quarterly basis.
In this post, you will finds key aspects about its latest business updates to take note of, along with my personal thoughts about it as a shareholder of the Singapore bank to share…
Financial Performance (Q1 FY2020 vs. Q1 FY2021)
| Q1 FY2020 | Q1 FY2021 | % Variance | |
| – Net Interest Income (S$’mil) | $2,482m | $2,107m | -15.1% |
| – Net Fee & Commission Income (S$’mil) | $832m | $953m | +14.5% |
| – Other Non-Interest Income (S$’mil) | $712m | $794m | +11.5% |
| Total Income (S$’mil) | $1,553m | $1,587m | +2.0% |
| Net Profit (S$’mil) | $1,165m | $2,009m | +72.4% |
On the whole, I must say that DBS’ latest set of results is largely an improved one compared to the same time period last year.
What stood out among the financial figures reported was its 72.4% year-on-year (y-o-y) jump in its net profit, which was the first time its quarterly earnings crossed above the S$2b mark – this can be attributed to a 14.5% growth in its net fee and commission income to a new high of S$953m (from improvements in its wealth management fees by 24% to a record of S$519m as strong investor sentiment drove demand across a wide range of investment products in a low interest rate environment, a 10% growth in its transaction service fees to a new high of S$230m as trade finance and cash management fees grew), as well as a 11.5% improvement in its other non-interest income, which was contributed by an increase in its trading income as Treasury Markets non-interest income and treasury customer income rose to new highs.
However, its total income saw a 4.3% decline due to a 15.1% drop in its net interest income as it was impacted by the current low interest rate environment.
Key Financial Ratios (Q4 FY2020 vs. Q1 FY2021)
In this section, let us take a look at some of the key financial ratios reported by the bank for the first quarter of 2021 ended 31 March 2021, compared against the ratios reported in the previous quarter 3 months ago – i.e. the fourth quarter of 2020 ended 31 December 2020, to find out if it has improved (just like many of the bank’s financial figures we’ve looked at in the previous section), remained consistent, or deteriorated:
| Q4 FY2020 | Q1 FY2021 | Difference (in Percentage Points – pp) | |
| Net Interest Margin (%) | 1.49% | 1.49% | – |
| Return on Assets (%) | 0.63% | 1.25% | +0.62pp |
| Return on Equity (%) | 7.7% | 15.4% | +7.7pp |
| Non-Performing Loans Ratio (%) | 1.6% | 1.5% | -0.1pp |
My Observations: Compared to the previous quarter 3 months ago, the Singapore bank’s key performance ratios have improved rather significantly in my opinion – particularly in its return on equity, which recorded a 7.7pp improvement to 15.4%, along with its non-performing loans ratio going back to 1.5% (which is same as that recorded in FY2018 and FY2019, both years before the pandemic.)
Another thing to note is that the bank’s return on assets have improved by 0.62pp to 1.25% as at the end of Q1 FY2021.
Dividends Per Share
A dividend payout of 18.0 cents/share was declared for the current quarter under review, in-line with Monetary Authority of Singapore’s (MAS) recommendations for the banks to pay out 60.0% of what they had paid out in FY2019 – for DBS, the amount of 18.0 cents/share paid out in the four quarters between Q2 FY2020 and Q1 FY2021 represents a 60.0% payout of $1.23/share declared in FY2019.
For those who prefer to receive scrips (i.e. shares of the bank in place of cash dividends), the scrip dividend scheme will apply, which will be issued at the average of the closing prices on 10 and 11 May 2021.
If you are a shareholder of the bank, here are some dates you need to take note of regarding its dividend payout:
Ex-Date: 10 May 2021
Record Date: 11 May 2021
Payout Date: 25 June 2021
With regard to the bank’s dividend payout in the coming quarters ahead, we await for guidelines to be issued by the MAS.
Closing Thoughts
I’m sure you will agree with me that DBS’ latest quarter results is a very strong one, with a number of record breaking feats in:
- Its net profit of S$2,009m in Q1 FY2021 is the first time the bank’s quarterly earnings crossed above the S$2b mark.
- Net fee and commission income for the quarter under review reached a new high of S$953m.
- Wealth management fees for the bank in Q1 FY2021 of S$519m was a new high.
- Transaction fees for the quarter was up to a new high of S$230m.
In terms of its key financial ratios, compared to the previous quarter, it has, in my opinion, improved rather significantly as well.
With that, I have come to the end of my review of DBS Group Holdings’ first quarter business update. Hope you’ve found the contents I’ve presented above useful.
Related Documents
Disclaimer: At the time of writing, I am a shareholder of DBS Group Holdings Limited.
Upcoming Online Event: Fireside Chat on Investing in REITs
Date: Wednesday, 26 March 2025
Time: 8.00-9.00pm Singapore Time
Venue: Zoom (in the comfort of your own home)
Price: FOC
Registration: Click here to register now...
Deeply thankful to finance mindset coach, Ms Dinah Poehlmann from YourFinanceMind.com for the invite, where I'll be sharing my humble 2-cents about REIT investing.
For beginners, we'll be spending some time to cover the basic of REIT investing; for experienced investors, we'll be discussing about whether REIT investing is still a viable option amid the interest rate volatility, what kind of roles should REITs play in your investment portfolio, and much more.
There's also a Q A session for you to ask me any burning questions you may have about REIT investing.
You can signup for the free session (sorry there will not be any replays) here...
Are You Worried about Not Having Enough Money for Retirement?
You're not alone. According to the OCBC Financial Wellness Index, only 62% of people in their 20s and 56% of people in their 30s are confident that they will have enough money to retire.
But there is still time to take action. One way to ensure that you have a comfortable retirement is to invest in real estate investment trusts (REITs).
In 'Building Your REIT-irement Portfolio' which I've authored, you will learn everything you need to know to build a successful REIT investment portfolio, including a list of 9 things to look at to determine whether a REIT is worthy of your investment, 1 simple method to help you maximise your returns from your REIT investment, 4 signs of 'red flags' to look out for and what you can do as a shareholder, and more!
You can find out more about the book, and grab your copy (ebook or physical book) here...
Comments (0)