Singapore’s largest bank, DBS Group Holdings Limited (SGX:D05), have released its results for the first half of the financial year 2021 ended 30 June 2021 early this morning.

One of the questions that’s on the minds of many shareholders is whether or not the bank manage to continue to record similar improvements in the first quarter (you can check out a summary I have written when the bank released its first quarter business update here), and more importantly, following the Monetary Authority of Singapore (MAS) lifting the cap on dividend payouts last week (to refresh your memory, the MAS made a recommendation for Singapore-listed banks and financial institutions to cap their dividend payout to 60.0% of what was paid out in FY2019 to preserve capital in light of the uncertainties relating to Covid-19), did the bank restore its dividend payout to the amount it paid out in the second quarter FY2019?

In this post, you will find a summary of the salient points about DBS’ latest financial results, key financial ratios, along with its dividend payout declared for the quarter under review. On top of that, you’ll also read about my thoughts about the bank’s latest set of results, and my outlook for the second half of 2021 ahead.

Let’s begin…

Financial Results (1H FY2020 vs. 1H FY2021)

The following table summarises some of the most important financial statistics reported by the bank for the first half of FY2021, compared against the same time period last year:

1H FY20201H FY2021% Variance
– Net Interest
Income (S$’mil)
– Net Fee &
Commission Income
– Other Non-
Interest Income
Total Income
Total Expenses
Net Profit
Attributable to
Shareholders (S$’mil)

Personally, I felt that the Singapore bank’s latest set of financial results, compared to the same time period last year (where the country suffered from the brunt of the pandemic, particularly during the 2 month ‘circuit breaker’ period), was a mixed bag.

The 12.3% year-on-year (y-o-y) decline in the bank’s net interest income can be attributed to a 27-basis point plunge in its net interest margin to 1.47%, with most of the decline occurring in the 2 quarters after the global interest rate cuts in March 2020, which more than offset loan and deposit growth.

Also, the 1.9% y-o-y dip in its other non-interest income is due to lower investment gains due to favourable market conditions a year ago, offset by a record trading income (which went up 38% to S$1.04b as Treasury Markets non-interest income and treasury customer income both rose to new highs).

On the other hand, the 20.4% y-o-y increase in its net fee and commission is due to a broad-based momentum across product lines.

Despite its total income (which comprised of the sum of its net interest income, net fee and commissions income, as well as other non-interest income) dipping by 4.0%, coupled with total expenses growing by 3.0% in the same time period, its net profit attributable to shareholders still managed to climb by 53.9% to S$3,712m, partly contributed by a huge decline in the allowances for credit and other losses (which plunged from S$1,935m in 1H FY2020 to just S$89m in 1H FY2021.)

Key Financial Ratios (Q1 FY2021 vs. Q2 FY2021)

Moving on, let us take a look at some of the bank’s key financial ratios recorded for the current quarter under review (the second quarter of 2021 ended 30 June 2021), compared against the previous quarter 3 months ago (i.e. the first quarter of 2021 ended 31 March 2021) to find out whether or not it has improved or declined:

Q1 FY2021Q2 FY2021Difference (in
Percentage Points – pp)
Net Interest
Margin (%)
Return on
Assets (%)
Return on
Equity (%)
Loans Ratio (%)

My Observations: Apart from its non-performing loans ratio which remained the same as the previous quarter, the key financial ratios I normally focus my attention on have all weakened in the same time period.

Dividend Payout to Shareholders (Q2 FY2020 vs. Q2 FY2021, and 1H FY2020 vs. 1H FY2021)

The following table is the bank’s dividend payout to its shareholders for the quarter under review, compared to the same time period last year:

Q2 FY2020Q2 FY2021% Variance
Dividend Per
Share (S$’cents/share)
18.0 cents33.0 cents+83.3%

I remembered during the bank’s annual general meeting (AGM) back in March 2021, CEO Mr Piyush Gupta expressed his confidence in the bank’s ability to resume its pre-Covid dividend payout if MAS were to lift the cap on the bank’s dividend payouts – and indeed, its quarterly dividend payout of 33.0 cents/share was the same as that paid out in the second quarter of FY2019 (which was before the pandemic.)

Together with 18.0 cents/share paid out in the first quarter of FY2021, the bank has paid out a total of 51.0 cents/share for the first half of FY2021, which is the same as that paid out in the same time period last year (where it paid out 33.0 cents/share in the first quarter of FY2020, which was before the announcement of the dividend cap by the MAS, followed by 18.0 cents/share in the second quarter – which was after the dividend cap announcement.)

Last but not least, scrip dividend scheme has been suspended, so shareholders will only receive cash payouts. The following are important dates to note regarding it:

Ex-Date: 13 August 2021
Record Date: 14 August 2021
Payout Date: 26 August 2021

Closing Thoughts

In terms of the bank’s latest set of results, as mentioned in the earlier section, I felt it was a mixed bag – while the decline in its net interest income was pretty much expected considering the fact that interest rates continued to remain low, but on the whole, I expected the bank to perform better considering that in the current first half of FY2021 under review, the overall economic situation is comparatively much better than the same time period last year – no doubt there are periods where tighter safe distancing measures were introduced in the current period under review, but a huge majority of businesses were still permitted to continue their operations (unlike last year, particularly during the 2-month ‘circuit breaker’ period, most businesses had their normal operations disrupted to a certain extent.)

Looking ahead, I will continue to keep a close watch on the bank’s results in the coming quarters. My outlook for the bank’s results in the second half of 2021 is that, they should improve considering that the Covid situation is much better compared to last year, coupled with the economy slowly recovering to pre-Covid condition.

Regarding its dividend payouts, the bank’s latest quarter payout of 33.0 cents/share was within my expectation. I expect the bank to continue its quarterly payout of 33.0 cents/share in the third and four quarter ahead. With regard to questions from some of my readers about my thoughts on the bank issuing a ‘special dividend’ to return unused allowances set aside last year, my personal opinion is that, the bank may declare one when they declare their fourth quarter results this financial year or the next – depending on the situation of the pandemic.

With that, I have come to the end of my review on DBS Group Holdings’ latest results. Please note that everything you have just read above (particularly my opinions) are meant for educational purposes only, and they certainly do not imply any recommendations to buy or sell shares of the bank. As always, you should always do your own due diligence before making any investment decisions.

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

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