Singapore’s largest bank in DBS Group Holdings Limited (SGX:D05) is the second bank to release its business update for the third quarter of the financial year 2022 ended 30 September 2022 early this morning (03 November 2022.)

Similar to UOB (which have published its Q3 FY2022 business update last Friday, and you can check out my review about it here), for the current quarter under review, it only released a snippet of some of the key financial figures (as the bank have switched to reporting its full financial results on a half-yearly basis), which we will be looking at, along with some of the key financial ratios in this post. I’ll also be sharing my thoughts about the bank’s latest ‘report card.’

Let’s begin:

Key Financial Figures (Q3 FY2021 vs. Q3 FY2022, and 9M FY2021 vs. 9M FY2022)

In this section, you’ll find some of the Singapore-listed bank’s key financial figures both on a quarter-on-quarter (i.e. Q3 FY2021 vs. Q3 FY2022) basis, as well as on a year-on-year (i.e. 9M FY2021 vs. 9M FY2022):

Q3 FY2021 vs. Q3 FY2022:

Q3 FY2021Q3 FY2022% Variance
– Net Interest
Income (S$’mil)
$2,104m$3,020m+43.5%
– Net Fee & Commission
Income (S$’mil)
$888m$771m-13.2%
– Other Non-Interest
Income (S$’mil)
$569m$753m+32.3%
Total Income
(S$’mil)
$3,561m$4,544m+27.6%
Total Expenses
(S$’mil)
$1,668m$1,825m+9.4%
Net Profit
(S$’mil)
$1,700m$2,236m+31.5%

My Observations: Apart from the decline in its net fee and commission income (due to lower wealth management and investment banking fees more than offset increases in card and loan-related fees), I’m sure you’ll agree with me that DBS’ latest quarter-on-quarter (q-o-q) results is a very solid one.

The 43.5% jump in its net interest income can be attributed to a huge 47-basis-point expansion in net interest margin (from 1.43% in Q3 FY2021 to 1.90% in Q3 FY2022), along with a loan growth of 6%. Its other non-interest income also surged by 32.3%.

Finally, the 9.4% increase in total expenses was due to higher staff costs.

9M FY2021 vs. 9M FY2022:

9M FY20219M FY2022% Variance
– Net Interest
Income (S$’mil)
$6,300m$7,661m+21.6%
– Net Fee & Commission
Income (S$’mil)
$2,709m$2,430m-10.3%
– Other Non-Interest
Income (S$’mil)
$1,995m$1,992m-0.2%
Total Income
(S$’mil)
$11,004m$12,083m+9.8%
Total Expenses
(S$’mil)
$4,798m$5,127m+6.9%
Net Profit
(S$’mil)
$5,412m$5,852m+8.1%

My Observations: On a year-on-year (y-o-y) basis, the most notable improvement was in its net interest income, as banks were key beneficiaries from the Federal Reserve’s series of interest rate hikes in the year, leading to its net interest margin climbing from 1.45% in Q3 FY2021 to 1.65% in Q3 FY2022. Together with its loans growing by 6% (compared to last year), its net interest income soared by 21.6% to $7,661m.

The 10.3% decline in net fee and commission income was due to a decline in wealth management and investment banking fees, which more than offset growth in other fee activities.

Finally, the bank’s net profit of $5,852m was a new high.

Key Financial Ratios (Q2 FY2022 vs. Q3 FY2022)

Apart from looking at its financial results, I also look at the following financial ratios (i.e. Net Interest Margin, Return on Assets, Return on Equity, and Non-Performing Loans Ratio) whenever I study a bank’s results.

The following table is a comparison of the financial ratios reported for the current quarter under review (i.e. Q3 FY2022 ended 30 September 2022) compared against that reported in the previous quarter 3 months ago (i.e. Q2 FY2022 ended 30 June 2022) to find out if it has continued to remain resilient:

Q2 FY2022Q3 FY2022Difference (in
Percentage Points – pp)
Net Interest
Margin(%)
1.58%1.90%+0.32pp
Return on
Assets (%)
0.99%1.18%+0.19pp
Return on
Equity (%)
13.4%16.3%+2.9pp
Non-Performing
Loans Ratio (%)
1.3%1.2%-0.1pp

My Observations: Compared to the previous quarter, again the bank’s key financial ratios recorded strong improvements – of note is its net interest margin, which climbed by another 0.32pp to 1.90%, as a result of the Federal Reserve’s interest rate hikes.

The bank’s return on equity for Q3 FY2022, at 16.3%, was a new high.

Last but not least, I’m impressed by a further improvement in its non-performing loans ratio, which improved by another 0.1pp to 1.2% (and at this ratio, it is considered to be very low and very ideal in my opinion.)

Dividend Payout to Shareholders

DBS Group Holdings is the only Singapore-listed bank to declare a dividend payout to its shareholders on a quarterly basis (with the other 2 banks in UOB and OCBC declaring a dividend payout on a half-yearly basis.)

For the current quarter under review, a 36.0 cents/share of dividend payout was declared – and this represented a 9.1% increase from the 33.0 cents/share of payout declared in the same time period last year (i.e. Q3 FY2021.)

If you are a shareholder of DBS, do take note of the following dates regarding its latest dividend payout:

Ex-Date: 11 November 2022
Record Date: 14 November 2022
Payout Date: 24 November 2022

Finally, on a year-on-year basis, for the first 9 months of the current financial year, its total dividend payout amounts to S$1.08/share – a 28.6% increase from the payout of S$0.84/share paid out for the first 9 months last year (but do take note that for last year, its payout for the first quarter was still subjected to a dividend cap by the Monetary Authority of Singapore, or MAS, for prudence as a result of the Covid-19 pandemic; but this cap has since been lifted from Q2 FY2021.)

Management’s Comments & Outlook

“The record earnings we achieved amidst challenging market conditions in the third quarter reflected the strength of our franchise. Business momentum was maintained, asset quality was resilient and the inherent value of our deposit franchise was more fully realised. The record return on equity of 16.3% demonstrates the significant structural improvements we have made, including from our digital transformation. We enter the coming year with leverage to rising interest rates, a strong balance sheet and proven ability to capture growth, which will enable us to continue delivering shareholder returns.”

Closing Thoughts

It’s another record breaking quarter for the bank – with its net profit for the first 9 months of FY2022 (at 5,852m), and its return on equity as at the end of the third quarter of FY2022 (at 16.3%) at new highs.

Another stat that impressed me was the improvement in its non-performing loans – which improved by 0.1pp to 1.2% – this ratio is currently the lowest among the 3 Singapore banks at the moment (with UOB’s non-performing loans ratio for Q3 FY2022 at 1.5%, and OCBC’s non-performing loans ratio for Q2 FY2022 at 1.3%.)

With the Federal Reserve announcing yet another 0.75% of interest rate hike hours ago, the 3 Singapore banks’ net interest margin is poised to record further improvement in the coming quarters, with its net interest income recording further improvements.

On the other hand, the slowdown of economic growth (leading to loan volume going down as a result as individuals and businesses being more cautious about taking on more loans), along with possible defaults (leading to the banks’ non-performing loan ratio going up) are key risks for the banks.

With that, I have come to the end of my review of DBS’ latest business update for the third quarter. As always, do take note that all the opinions above are purely mine for educational purposes only. They do not represent any buy or sell calls for the bank’s shares. Please do your own due diligence before you make any investment decisions.

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