DBS Group Holdings Limited (SGX:D05), or DBS for short, is a household name for fellow Singaporeans, for a huge majority of us have a bank account with the bank.
Besides being the largest bank in Singapore by assets, it is also among the leading banks in Asia where it has a presence in 19 markets. The bank have won numerous awards including the ‘World’s Best Bank’ by Global Finance, ‘World’s Best Bank’ by Euromoney, and ‘Global Bank of the Year’ by The Banker. This is on top of the bank being accorded the ‘Safest Bank in Asia’ award by Global Finance for 14 consecutive years from 2009 to 2022.
The Singapore-listed bank is the 2nd of the trio to release its results for the 2nd quarter, and for the first half of FY2023 early this morning (03 August 2023) – with UOB having already released its results last Thursday (and you can read my review here), and OCBC releasing its results tomorrow morning.
In this post, you will find my review of the bank’s latest financial performance, key financial ratios, and dividend payout to shareholders.
Let’s begin:
Financial Performance (1H FY2022 vs. 1H FY2023, and Q2 FY2022 vs. Q2 FY2023)
In this section, I will first be reviewing DBS’ results for the first half of the year, followed by its results for the second quarter:
1H FY2022 vs. 1H FY2023:
| 1H FY2022 | 1H FY2023 | % Variance | |
| – Net Interest Income (S$’mil) | $4,325m | $6,965m | +61.0% |
| – Net Fee & Commission Income (S$’mil) | $1,659m | $1,674m | +0.9% |
| – Other Non-Interest Income (S$’mil) | $1,437m | $1,387m | -3.5% |
| Total Income (S$’mil) | $7,421m | $9,981m | +34.5% |
| Total Expenses (S$’mil) | $3,302m | $3,813m | +15.5% |
| Net Profit Attributable to Shareholders (S$’mil) | $3,616m | $5,200m | +43.8% |
My Observations: Overall, it’s a stellar set of result reported by DBS.
The bank’s total income soared by 34.5% compared to the same time period last year, contributed by a huge 61.0% jump in its net interest income, which was driven by the commercial book from a high interest margin. Its net fee and commission income inched up by 0.9% from improved credit card fees due to higher spending including for travel. However, this was offset by a slightly weaker other non-interest income (which fell by 3.5%), due to lower treasury markets trading income, but offset by a higher treasury customer income.
With total income outpacing growth (by 34.5%) outpacing the increase in expenses (by 15.5%), its net profit attributable to shareholders recorded a 43.8% jump to S$5.2bn.
Q2 FY2022 vs. Q2 FY2023:
| Q2 FY2022 | Q2 FY2023 | % Variance | |
| – Net Interest Income (S$’mil) | $2,320m | $3,581m | +54.4% |
| – Net Fee & Commission Income (S$’mil) | $768m | $823m | +7.2% |
| – Other Non-Interest Income (S$’mil) | $652m | $641m | -1.7% |
| Total Income (S$’mil) | $3,740m | $5,045m | +34.9% |
| Total Expenses (S$’mil) | $1,658m | $1,931m | +16.5% |
| Net Profit Attributable to Shareholders (S$’mil) | $1,815m | $2,629m | +44.8% |
My Observations: Looking at the Singapore-listed bank’s results for the 2nd quarter, it is equally as remarkable (in my opinion).
Compared to the 2nd quarter last year, its total income went up by 34.9% to a record high of $5,045m (its also the first time the bank’s total income for the quarter crossed the $5bn mark), mainly contributed by a 54.4% jump in net interest income, as a result of its net interest margin improving by 0.58 percentage points (pp) from 1.58% in Q2 FY2022 to 2.16% in Q2 FY2023. Its net fee and commissions income went up by 7.2% to $823m, the first year-on-year (y-o-y) increase in 6 quarters, which can be attributed to higher wealth management fees (by 12% from higher bancassurance and investment product sales), and higher credit card fees (by 17% from higher spending for travel).
With a smaller percentage increase in total expenses (by 16.5%, mainly due to higher staff costs) compared to its total income (by 34.9%), its net profit attributable to shareholders soared by 44.8% to S$2,629m, which is also a record for the bank.
Key Financial Ratios (Q1 FY2023 vs. Q2 FY2023)
Just like in my review of UOB’s Q2 and 1H FY2023 results, I will also be looking at the same 3 key financial ratios (i.e., net interest margin, return on equity, and non-performing loans ratio) reported by DBS by comparing the statistics reported for the current quarter under review against that reported in the previous quarter 3 months ago (i.e., Q1 FY2023 ended 31 March 2023 vs. Q2 FY2023 ended 30 June 2023), as follows:
| Q1 FY2023 | Q2 FY2023 | Difference (in Percentage Points – pp) | |
| Net Interest Margin (%) | 2.12% | 2.16% | +0.04pp |
| Return on Equity (%) | 18.6% | 19.2% | +0.6pp |
| Non-Performing Loans Ratio (%) | 1.1% | 1.1% | – |
My Observations: Compared to the previous quarter 3 months ago, DBS’ key financial ratios in net interest margin and return on equity continuing to record improvements. Particularly, its return on equity of 19.2% was a new high for the bank.
Non-performing loans ratio remained the same at 1.1%, with non-performing assets little changed from the previous quarter at S$4.99bn, as new non-performing loan formation remained low and was offset by repayments and write-offs.
Dividend Payout to Shareholders (Q2 FY2022 vs. Q2 FY2023)
In case you’re not already aware, DBS is the only one out of the 3 Singapore-listed banks to pay out a dividend once every quarter.
For the 2nd quarter, a dividend payout of 48.0 cents/share was declared – a 33.3% increase from the dividend payout of 36.0 cent/share declared in the same time period last year (i.e., Q2 FY2022).
The dividend bumper in the quarter was a pleasant surprise, considering the bank usually increases dividends in the 4th quarter, and also the fact that they have just upped its dividend payout from 36.0 cents to 42.0 cents in the fourth quarter of FY2022.
Including the bank’s dividend payout of 42.0 cents for the 1st quarter, its payout for the 1st half of FY2023 amounts to 90.0 cents, a 25.0% increase from the payout of 72.0 cents declared last year.
If you are a shareholder of the Singapore-listed bank, do take note of the following dates on its dividend payout:
Ex-Date: 11 August 2023
Record Date: 14 August 2023
Payout Date: 24 August 2023
CEO Piyush Gupta’s Comments & Outlook (from the Bank’s Press Release)
“We achieved another set of record results as second-quarter and first-half earnings reached new highs with return on equity at 19%. The commercial book benefited from higher interest rates and broad-based growth in non-interest income activities, which was moderated by higher funding costs for Treasury Markets. During the quarter, we commenced work to strengthen the resilience of our technology while awaiting completion of the independent review into the recent digital disruptions.
While there is some macroeconomic uncertainty, our prospects for the rest of the year are anchored on a franchise with a proven ability to capture business opportunities. Our longstanding prudence in building general allowance reserves and maintaining strong capital ratios will position us well to withstand headwinds.”
Closing Thoughts
It’s another outstanding quarter and year for the bank – for the 2nd quarter, its total income and net profit attributable to shareholders recorded new highs of S$5,045m and S$2,629m respectively. Its return on equity, at 19.2%, was also a new high; for the first half of the year, its net profit attributable to shareholders (excluding a one-off item in the integration cost of S$60m for the acquisition of Taiwan consumer banking business from Citigroup Inc.), at S$5,260m, was also a new record for the bank.
The biggest surprise is in its 33.3% jump in dividend for the 2nd quarter to 48.0 cents – considering the bank’s normal practice over the previous years is to bump dividend payouts in the 4th quarter, and also the fact that they have just increase its dividend payout from 36.0 cents to 42.0 cents in the fourth quarter of FY2022.
All in all, it’s a fantastic result for the bank in my opinion, and I’m sure you’ll agree with me on that. With that, I have come to the end of my review of DBS Group Holdings’ results for the 2nd quarter and for the first half of FY2023. As always, I hope you have found the contents presented in this post useful, and do note that everything you have just read is purely for educational purposes only. You should always 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.
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