Following UOB (which have released its Q3 and 9M FY2023 business update on 26 October, and you can read my review about it here), DBS Group Holdings Limited (SGX:D05), or DBS for short, is the 2nd of the 3 Singapore-listed banks to do so early this morning (06 November), with OCBC releasing its Q3 and 9M FY2023 business update on Friday, 10 November.
Apart from being the largest bank in Singapore in terms of its total assets, DBS is also one of the leading financial services group in Asia, where it has a presence in a total of 19 markets. The Singapore-listed bank focuses its businesses on 3 key geographical areas – Greater China, Southeast Asia, and South Asia. In terms of credit ratings, it is also among the highest in the world, at “AA-“ and “Aa1”.
However, the bank has been in the front pages in recent weeks for the wrong reasons – following a series of disruptions to its banking services in recent months, the Monetary Authority of Singapore (or MAS for short) have announced last Wednesday (01 November) that it will be imposing a 6-month pause on the bank’s non-essential IT changes (this is to ensure it keeps a sharp focus on restoring the resilience of its digital banking services). On top of that, the bank is also not allowed to acquire new business ventures, or reduce the size of its branch and ATM networks in Singapore during this period – you can read the article in full here.
Shifting our focus back to its results, how has it performed this time round? In this post, you will find my review of DBS’ key financial figures and ratios, along with information about its upcoming dividend payout (for those who are not aware, DBS is the only one among the 3 Singapore-listed banks that pays out a dividend to its shareholders on a quarterly basis).
Let’s begin:
Key Financial Figures (Q3 FY2022 vs. Q3 FY2023, and 9M FY2022 vs. 9M FY2023)
In this section, you will read about my review of DBS’ key financial figures reported for the 3rd quarter (i.e., Q3 FY2022 vs. Q3 FY2023), as well as for the first 9 months of the financial year (i.e. 9M FY2022 vs. 9M FY2023):
Q3 FY2022 vs. Q3 FY2023:
| Q3 FY2022 | Q3 FY2023 | % Variance | |
| – Net Interest Income (S$’mil) | $3,020m | $3,504m | +16.0% |
| – Net Fee & Commission Income (S$’mil) | $771m | $843m | +9.3% |
| – Other Non-Interest Income (S$’mil) | $700m | $845m | +20.7% |
| Total Income (S$’mil) | $4,491m | $5,192m | +15.6% |
| Total Expenses (S$’mil) | $1,825m | $2,038m | +11.7% |
| Net Profit (S$’mil) | $2,236m | $2,593m | +16.0% |
My Observations: I’m sure you’ll agree with me that DBS’ 3rd quarter results is an impressive one – with its top- and bottom-lines recording a double digit percentage improvement compared to the same time period last year.
DBS’ total income of $5,192m for the 3rd quarter is another new record for the bank, as a result of a higher net interest margin, and growth in its other non-interest income.
The 16.0% jump in the bank’s net interest income can be attributed to a 0.29 basis point increase in net interest margin (from 1.90% in Q3 FY2022 to 2.19% in Q3 FY2023).
Net fee and commission income went up by 9.3% due to a 22% jump in wealth management fees (from higher bancassurance and investment product sales), 21% growth in card fees (from higher spending, as well as the integration of Citi Taiwan), as well as a 12% increase in loan-related fees.
The 20.7% growth in its other non-interest income can be attributed to higher treasury customer sales.
Total expenses saw a 11.7% increase due to higher staff costs, and the consolidation of Citi Taiwan.
Finally, the bank’s net profit, inclusive of Citi Taiwan’s integration costs and accounting harmonisation (of S$40m), saw a 16.0% jump to S$2,593m. Excluding this, its net profit would have been up by 17.8% to S$2,633m.
9M FY2022 vs. 9M FY2023:
| 9M FY2022 | 9M FY2023 | % Variance | |
| – Net Interest Income (S$’mil) | $7,661m | $10,208m | +33.2% |
| – Net Fee & Commission Income (S$’mil) | $2,430m | $2,517m | +3.6% |
| – Other Non-Interest Income (S$’mil) | $1,821m | $2,448m | +34.4% |
| Total Income (S$’mil) | $11,912m | $15,173m | +27.4% |
| Total Expenses (S$’mil) | $5,127m | $5,851m | +14.1% |
| Net Profit (S$’mil) | $5,852m | $7,793m | +33.2% |
My Observations: Looking at DBS’ results for the first 9 months of the year, its equally as impressive – with the bank’s total income and net profit of $15,173m and $7,793m respectively being new records.
The bank’s net interest income soared by 33.2% to $10,208m as a result of a 51 basis point jump in its net interest margin (from 1.65% in 9M FY2022 to 2.16% in 9M FY2023), as asset repricing outpaced a rise in funding costs.
Net fee and commission income increased by 3.6% as growth in the 2nd and 3rd quarters more than offset a decline in the 1st quarter.
Finally, on its net profit, if Citi Taiwan’s integration costs and accounting harmonisation was stripped out, it would have been up by 34.9% to $7,893m.
Key Financial Ratios (Q2 FY2023 vs. Q3 FY2023)
If you have read my review of the bank’s results in the previous quarter (i.e., Q2 & 1H FY2023 – and you can check out the post here), you’d have noticed that its net interest margin and return on equity have continued to record improvements – especially the latter, which hit a new high for the bank.
Did the growth of the same 2 financial ratios continue in the current quarter under review (i.e., Q3 FY2023 ended 30 September 2023) when compared against the previous quarter (i.e., Q2 FY2023 ended 30 June 2023)? Let us find out in the table below:
| Q2 FY2023 | Q3 FY2023 | Difference (in Percentage Points – pp) | |
| Net Interest Margin (%) | 2.16% | 2.19% | +0.03pp |
| Return on Equity (%) | 19.2% | 18.2% | -1.0pp |
| Non-Performing Loans Ratio (%) | 1.1% | 1.2% | +0.1pp |
My Observations: Non-performing loans ratio edged up slightly to 1.2% due to Citi Taiwan.
While return on equity fell slightly, but at 18.2%, it remains at a very high level (in my personal opinion.)
Dividend Payout to Shareholders
For the current quarter under review (i.e., Q3 FY2023), a dividend payout of 48.0 cents/share was declared (I was expecting a 42.0 cents/share payout this time round, so the fact that the bank maintained its dividend payout the same as the 2nd quarter was a nice surprise for me) – compared to its dividend payout of 36.0 cents/share declared last year (i.e., Q2 FY2022), this represented a 33.3% improvement.
On a 9-month basis, together with its payout of 42.0 cents/share in Q1 FY2023, and 48.0 cents/share in Q2 FY2023, its total payout amounts to 138.0 cents/share – again, this represents an improvement of 27.8% compared to its payout of 108.0 cents/share in 9M FY2022.
If you are a shareholder of DBS Group Holdings Limited, do take note of the following dates regarding its dividend payout:
Ex-Date: 14 November 2023
Record Date: 15 November 2023
Payout Date: 27 November 2023
CEO Mr Piyush Gupta’s Comments & Outlook (from the Bank’s Press Release)
“We achieved record income in the third quarter as net interest margin continued to expand and growth in commercial book non-interest income was sustained. The successful integration of Citi Taiwan has progressed our strategy of building meaningful scale in growth markets. As we enter the coming year, higher-for-longer interest rates will be a net benefit to earnings, while our solid balance sheet with ample liquidity, prudent general allowance reserves and healthy capital ratios will provide us with strong buffers against macro uncertainties.
We will also dedicate ourselves to executing the comprehensive set of measures we recently announced to address the series of digital disruptions, for which we are truly sorry. We are committed to strengthening our technology resilience and ensuring customer service reliability.”
Closing Thoughts
Another record breaking quarter for the DBS in its total income and profit before allowances (both for the 3rd quarter and for the first 9 months of the year), as well as its net profit (for the first 9 months of the year) – which can be attributed by a continued expansion in net interest margin, and sustained growth in commercial book non-interest income.
From my understanding in the CEO’s presentation slides, the bank’s net profit will be maintained at around the record 2023 level.
Finally, its a pleasant surprise (in my opinion) that the bank have maintained the same dividend payout as the 2nd quarter – of 48.0 cents.
With that, I have come to the end of DBS’ latest business update for the 3rd quarter, and for the first 9 months of FY2023. I hope you have found the review above useful, ands do note that everything you have just read above are purely mine which I’m sharing 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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