Singapore’s biggest bank, DBS Group Holdings Limited (SGX:D05), have made available its business update for the third quarter of the financial year 2021 ended 30 September 2021 last Friday morning (05 November 2021.)
Just like UOB (you can check out my review on the bank’s Q3 business update here) and OCBC (you can check out my review on the bank’s Q3 business update here), DBS have also switched to reporting its full financial statements on a half-yearly basis – as such, they only provided some key statistics for the current quarter. However, unlike the other 2 Singapore-listed banks, DBS have continued to pay out a dividend to its shareholders on a quarterly basis (more on that later in this post) – so, for those who prefer to invest in companies that pays out a dividend once every 4 months, this is one you may be interested in.
In today’s post about DBS Group Holdings’ latest business update, you will find a summary of the most important aspects pertaining to its financial performance (where I’ll be doing a quarter-on-quarter, q-o-q, as well as on a year-on-year, or y-o-y basis), and also its financial ratios (where I will be comparing the stats reported for the current quarter under review against the previous quarter.)
Let’s begin…
Key Financial Performance Figures (Q3 FY2020 vs. Q3 FY2021, and 9M FY2020 vs. 9M FY2021)
As I’ve mentioned in the introductory paragraph, in this section, you’ll find the bank’s key financial performance figures both on a q-o-q (i.e. Q3 FY2020 vs. Q3 FY2021), as well as on a y-o-y (i.e. 9M FY2020 vs. 9M FY2021) basis:
Q3 FY2020 vs. Q3 FY2021:
| Q3 FY2020 | Q3 FY2021 | % Variance | |
| – Net Interest Income (S$’mil) | $2,171m | $2,104m | -3.1% |
| – Net Fee & Commission Income (S$’mil) | $798m | $888m | +11.3% |
| – Other Non-Interest Income (S$’mil) | $608m | $569m | -6.4% |
| Total Income (S$’mil) | $3,577m | $3,561m | -0.4% |
| Total Expenses (S$’mil) | $1,539m | $1,668m | +8.4% |
| Net Profit (S$’mil) | $1,297m | $1,700m | +31.1% |
In my personal opinion, the bank’s latest q-o-q results was a little bit of a mixed bag – with the 11.3% rise in its net fee and commission income (due to sustained momentum across all activities, and its $888m for the quarter was also the second highest on record for the bank) being offset by a 3.1% decline in its net interest income (due to its net interest margin falling by 0.1 percentage points from 1.53% in Q3 FY2020 to 1.43% in Q3 FY2021), and also a 6.4% drop in its other non-interest income (due to a decline in investment gains.) Hence, its total income saw a 0.4% q-o-q dip to $3,561m.
Also, as a result of the bank writing back on credit allowances of $70m for the current quarter under review, compared to credit charges of $554m in the same time period last year, its net profit climbed 31.1% to $1,700m.
9M FY2020 vs. 9M FY2021:
| 9M FY2020 | 9M FY2021 | % Variance | |
| – Net Interest Income (S$’mil) | $6,956m | $6,300m | -9.4% |
| – Net Fee & Commission Income (S$’mil) | $2,311m | $2,709m | +17.2% |
| – Other Non-Interest Income (S$’mil) | $2,062m | $1,995m | -3.2% |
| Total Income (S$’mil) | $11,329m | $11,004m | -2.9% |
| Total Expenses (S$’mil) | $4,578m | $4,798m | +4.8% |
| Net Profit (S$’mil) | $3,709m | $5,412m | +45.9% |
The bank’s y-o-y results were somewhat similar to its q-o-q results – where the growth in its net fee and commission income (which is a new high for the bank at $2,709m – with the increase led by wealth management, investment banking, transaction service and credit cards) was offset by declines in its net interest income (as broad-based loan growth of 9% compared to last year was offset by a 22 basis points decline in its net interest margin – from 1.67% in 9M FY2020 to 1.46% in 9M FY2021) and other non-interest income (as a record trading income was offset by a decline in investment gains due to more favourable market opportunities a year ago.) – This led to its total income to drop by 2.9% to $11,004m.
At the other end, due to a sharp decline in allowances for credit and other losses (down from $2,489m in 9M FY2020 to a mere $19m in 9M FY2021), its net profit saw a 45.9% jump to $5,412m.
Key Financial Ratios (Q2 FY2021 vs. Q3 FY2021)
Next, let us take a look at some of the key financial ratios reported by the bank for the current quarter under review (i.e. Q3 FY2021 ended 30 September 2021), where I will be comparing them against the ratios reported for the previous quarter 3 months ago (i.e. Q2 FY2021 ended 30 June 2021):
| Q2 FY2021 | Q3 FY2021 | Difference (in Percentage Points – pp) | |
| Net Interest Margin (%) | 1.45% | 1.43% | -0.02pp |
| Return on Assets (%) | 1.03% | 1.01% | -0.02pp |
| Return on Equity (%) | 12.7% | 12.1% | -0.06pp |
| Non-Performing Loans Ratio (%) | 1.5% | 1.5% | – |
My Observations: Compared to last quarter, its financial ratios have dipped slightly. The only positive to note is that its non-performing loans ratio have maintained at 1.5%.
Dividend Payout to Shareholders
For the current quarter under review, the management have declared a dividend payout of 33.0 cents/share to its shareholders – a 83.3% increase from the 18.0 cents/share paid out in the same time period last year (but do take note that in FY2020, the Monetary Authority of Singapore, or MAS, have made a recommendation on banks cap their dividend payouts to 60.0% of what was paid out in FY2019.)
In case you’re wondering, there’s no scrip applied this time round, so shareholders will be receiving their dividend payouts in cash only. If you’re a shareholder of the bank, do take note of the following dates regarding the dividend payout:
Ex-Date: 12 November 2021
Record Date: 15 November 2021
Payout Date: 26 November 2021
Closing Thoughts
Personally, I felt that the bank’s results this time round is a mixed bag – on the positive end, this is yet another record breaking quarter in its net fee and commission income (for the third quarter – which is the second highest on record for the bank, as well as for the first 9 months of the current financial year – which is a record for the bank.) Its trading income for the first 9 months of the current financial year was also a record for the bank. Another positive to note in the bank’s latest results update is that its net profit have significantly improved, both on a q-o-q as well as on a y-o-y basis, as a result of a huge dip in allowances for credit and other losses.
On the other hand, the bank’s net interest income continues to be affected by a drop in its net interest income.
Finally, in terms of its outlook ahead, I am of the opinion as more and more countries start re-opening once again after achieving their respective vaccination targets, facilitating business activities to resume once again and thus improving business sentiments, banks like DBS will benefit (and see improving sets of results.)
However, despite having said that, do note that this post is by no means a recommendation to buy or sell shares of the bank. Please do your own due diligence before you make any investment decisions.
Related Documents
Disclaimer: At the time of writing, I am a shareholder of DBS Group Holdings Limited.
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