Singapore’s largest bank in DBS Group Holdings Limited (SGX:D05) made available its annual report for the financial year ended 31 December 2021 (i.e. FY2021), along with details about its upcoming AGM yesterday (09 March 2022.)

As a shareholder, I have gone through its latest annual report, and for the benefit of those who do not have the time to go through it, you’ll find my summary of it here in this post, along with details about its upcoming Annual General Meeting (AGM):

Financial Year in General:

  • In 2021, global economies bounced back from the depths of a pandemic-infused recession as a result of mass vaccinations, pent-up consumer demand, accommodative monetary policy, and strong fiscal support – in particular, Singapore’s economy grew 7.6%, while Hong Kong’s economy (which is DBS’ second-largest market) expanded 6.4%.
  • DBS turned in its best year ever, not just in terms of its excellent financial performance, but also all-round delivery against key scorecard goals – notably, they were recognised by not one, but 2 global publications as being the best in the world yet again, including:
    • “World’s Best Bank” and “World’s Best Digital Bank” from Euromoney
    • “Global Bank of the Year”, and “Most Innovative in Digital Banking” from Financial Times publication The Banker
    • “World’s Safest Commercial Bank” by New York-based Global Finance

Key Financial Performance Highlights:

  • DBS’ net profit of S$6.8b in FY2021 (up 44% from S$4.7b in FY2020) was a record for the bank, while its Return on Equity, at 12.5%, was the second highest in more than a decade.
  • Despite the bank’s full-year loans growth was at a 7-year high (at 9% in constant-currency terms, which was broad based across corporate, trade, housing and wealth management loans), its net interest income still declined 7.0% to S$8.4b (FY2020: S$9.1b) due to the impact of lower interest rates (which fell 17 basis points to 1.45%, with the majority of decline occurring in the first half of the year.)
  • The 15.2% year-on-year growth in Net Fee and Commissions Income (notably, the first 3 quarters of the year were the three highest on record) was helped by its record-breaking wealth management fees (at S$1.79b, a 19% increase compared to last year) as digitalisation efforts continued to bear fruit (one of which was its human cum robot-advisory service, digiPortfolio, growing in popularity in recent years, fuelled by demand from a predominantly Gen Z/millennial demographic.) Credit card fees went up by 12% to S$715m as combined credit and debit card spending reached record levels even as travel spending remained subdued. Investment banking fees was also up 47% to S$218m from stronger equity underwriting and fixed income activities.
  • Other non-interest income fell 5.1% to S$2.33b (FY2020: S$2.46b) as record trading income (which rose 27% to a record S$1.79b as Treasury Markets non-interest income and treasury customer income both rose to new highs) was offset by lower investment gains due to favourable market opportunities a year ago.
  • For the year, the bank booked only S$52m in total allowances, down significantly from S$3.07b last year, as asset quality improved, with new non-performing assets formation falling to pre-pandemic levels, and offset by repayments of existing non-performing assets.

DBS’s Business Expansions in the Various Geographical Locations:

  • India: Successfully amalgamated Lakshmi Vilas Bank (LVB), giving them an enlarged footprint, particularly in Southern India, as well as scaling up their customer and SME businesses significantly; Integration has progressed well, and after an initial focus on stabilising LVB franchise, business momentum has picked up.
  • Taiwan: Agreed to acquire Citigroup’s Taiwan consumer banking business, which will help accelerate DBS Taiwan’s growth by at least 10 years, making it Taiwan’s largest bank by assets; transaction is expected to be accretive to earnings and return on equity immediately after completion, which is slated for mid-2023.
  • China: Acquired a 13% stake in Shenzhen Rural Commercial Bank, becoming its largest single shareholder; the investment will allow DBS to accelerate their Greater Bay Area strategy via Shenzhen. DBS have also launched DBS Securities (China) Limited, a joint venture company, in June 2021, with business already surpassing expectations (where the bank have successfully completed 5 onshore investment banking deals in the year.)
  • Hong Kong: DBS Bank (Hong Kong) received approval to offer investment products and solutions to Greater Bay Area customers under the Wealth Management Connect scheme, which represented a significant opportunity given more than 6m affluent households in the area.

Rationale behind DBS’ recent acquisitions of Lakshmi Vilas Bank, Shenzhen Rural Commercial Bank, and Citi Consumer Taiwan:

Lakshmi Vilas Bank (LVB):

  • India continues to be a very attractive banking market, especially in SME and retail segments.
  • LVB found to be attractive due to its deep presence in the 5 South Indian states, a part of the country that has attractive economic characteristics and a historical connectivity to Singapore.
  • Performance in the first year post-merger has been good, and Mr Gupta, CEO of DBS Group Holdings Limited, is confident that the bank has now a platform to allow rapid growth in the coming years.

Shenzhen Rural Commercial Bank (SZRCB):

  • It will allow the bank to accelerate their Greater Bay Area (GBA) strategy via Shenzhen, arguably GBA’s fastest growing city. Apart from that, they also see mutually beneficial collaboration between SZRCB and their franchises in Hong Kong and China.
  • While the stake (at 13%) is a minority one, it is the largest held by a single shareholder, and the bank may have the opportunity to increase its shareholding in the future.

Citi Consumer Taiwan:

  • Transaction will accelerate DBS Taiwan’s growth by at least 10 years, making it Taiwan’s largest foreign bank by assets; the combined entity will also have the largest credit cards balance, investment AUM (Assets Under Management), loan book, and deposit base amongst foreign banks in Taiwan – which will provide synergies from economies of scale, including reduction of global and regional overheads.

Contributions by the Above Transactions:

  • By 2024, the bank is expecting the above transactions to add some S$1.2b to S$1.3b to their revenue base, and an incremental S$0.5b to their bottom line – which will strengthen their franchise, and position them well to ride the crest of a structurally rising Asia.

Staying Ahead of the Curve in Harnessing New Blockchain & Artificial Intelligence Technologies:

  • The bank have launched a number of new businesses, both on their own, and in partnership with others, including:
    • DBS Digital Exchange (DDEx), offering tokenisation, trading and custody services of digital assets. Since its launch in December 2020, it has seen good business momentum, both in new clients onboarded as well as assets under custody, where trading values have exceeded S$1b in 2021, digital assets under custody growing by more than 10 times in the past 12 months to S$800m;
    • Partior, a blockchain-based cross-border clearing and settlement provider in Oct 2021, and is in the midst of signing up new banks to join the network;
    • Climate Impact X (CIX), a global exchange and marketplace for high-quality carbon credits, going live in Q1 FY2022;
    • DBS Fixed Income Execution (FIX) Marketplace, Asia’s first fully digital and automated fixed income execution platform. It has carried out 20 issuances amounting to S$4b in 2021.

Advancing on its Sustainability Agenda:

  • Recently established a Board Sustainability Committee to provide greater governance and oversight into climate-related risks and opportunities, as well as the bank’s broader environmental, social and governance efforts.
  • The bank became the first Singapore bank to become a signatory to the United Nations-convened, industry-led Net-Zero Banking Alliance in 2021, which commits them to transitioning the operational and attributable greenhouse gas emissions from their lending and investment portfolios to align with pathways to net zero by the year 2050 or sooner.
  • DBS is the first Singapore bank to commit to zero thermal coal exposure by 2039, where it has ceased onboarding new customers that derive more than 25% of their revenue from thermal coal since 2021 (and they will be lowering the threshold as time progresses.)
  • Finally, the bank have committed S$20.5b in sustainability financing transactions (which is more than double the amount from the previous year), taking their cumulative efforts to date to S$39.4b.

Dividend Payouts:

  • The Board have proposed a final dividend of 36.0 cents/share for approval at the forthcoming AGM, an increase of 3.0 cents/share from the previous payout, and bringing the total dividend for FY2021 to 120.0 cents/share.
  • Barring unforeseen circumstances, the annualised dividend going forward will rise to 144.0 cents/share (i.e. a payout of 36.0 cents/share every quarter) – in-line with its policy of paying sustainable dividends that grow progressively with earnings.

Outlook Ahead:

  • While the world seems to be learning to live with Covid-19 and opening up, geopolitics is casting some shadows, and the macroeconomic policy pathways are uncertain – as such, it is prudent to continue to be watchful and nimble.
  • The inorganic transactions and investments made over the last 12 months will strengthen the bank’s franchise, and position them well to ride the crest of a structurally rising Asia. On top of that, the Management is also expecting payoff from these initiatives in the short to medium-term, giving them additional engines of growth.
  • Also, given that technological changes could fundamentally reshape the financial system, the bank will do what they can to be ahead of the curve – some of the initiatives it had launched include DDEx, Partior, and CIX.

Notice of AGM:

DBS Group Holdings Limited will be holding its AGM on Thursday, 31 March 2022, at 2.00pm. Due to the current safe management measures in place, the meeting will be held online (with no physical attendance permissible.)

If you’re a shareholder of the bank, you can sign up to attend the meeting, along with submitting any questions you may have for the management, here (do take note that the deadline to do so will be on 28 March 2022, at 2.00pm):


I have just signed up to attend the meeting, and as always, for the benefit of those who aren’t able to attend, you’ll find a summary of it in due course. Along with my registration, I’ve also submitted the following question:

“Given the current sanctions imposed on Russia (as a result of their invasion on Ukraine), does DBS have any business exposure in the country? Also, does any of DBS’ business customers have business dealings in the country – if so, to what extent will the bank be impacted?”

I understand that in its coming AGM, all attendees will be able to vote for the resolutions during the meeting, along with raising any questions you may have live (so if you wish to ask any questions via audio/video, you may do so.)

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

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