Earnings season is in full swing right now, with many of the REITs having already released their business updates or full financial results for the quarter ended 30 September.
Banks are next in line – and speaking of which, Singapore’s largest bank by assets, DBS Group Holdings Limited (SGX: D05), or DBS for short, is the first to release its business update for the 3rd quarter, as well as for the first 9 months of the financial year ended 30 September 2024 early this morning (07 November 2024). In case you are wondering, both UOB and OCBC will be releasing their business updates for the 3rd quarter and first 9 months of FY2024 tomorrow morning.
In this post, you will find key highlights (in terms of its key financial figures and ratios, as well as dividend payout) to take note of in DBS’ latest business update:
Key Financial Figures (Q3 FY2023 vs. Q3 FY2024, and 9M FY2023 vs. 9M FY2024)
In this section, you will find key financial figures reported by Singapore’s largest lender for the 3rd quarter, as well as for the first 9 months of FY2024:
Q3 FY2023 vs. Q3 FY2024:
| Q3 FY2023 | Q3 FY2024 | % Variance | |
| – Net Interest Income (S$’mil) | $3,504m | $3,597m | +2.7% |
| – Net Fee & Commission Income (S$’mil) | $843m | $1,109m | +31.6% |
| – Other Non-Interest Income (S$’mil) | $845m | $1,047m | +23.9% |
| Total Income (S$’mil) | $5,192m | $5,753m | +10.8% |
| Total Expenses (S$’mil) | $2,038m | $2,249m | +10.4% |
| Net Fee Attributable to Shareholders (S$’mil) | $2,593m | $3,027m | +16.7% |
My Observations: It was a resilient set of results on the whole for DBS for the 3rd quarter – particularly, its net profit crossed the S$3 billion mark for the first time, contributed by a strong double-digit growth in its net fee and commission income, as well as in its other non-interest income.
Net interest income was up by 2.7% year on year to S$3.6 billion, with a 2% increase in loans.
Net fee and commissions income jumped by 31.6% year on year to a record S$1.1 billion, led by a 55% increase in wealth management. Treasury customer sales was also higher.
Total expenses was up by 10.8% to S$5.7 billion, partly due to expenses incurred by the newly acquired Citi Taiwan, which accounted for 3 percentage points of the increase.
9M FY2023 vs. 9M FY2024:
| 9M FY2023 | 9M FY2024 | % Variance | |
| – Net Interest Income (S$’mil) | $10,208m | $10,696m | +4.8% |
| – Net Fee & Commission Income (S$’mil) | $2,517m | $3,200m | +27.1% |
| – Other Non-Interest Income (S$’mil) | $2,448m | $2,896m | +18.3% |
| Total Income (S$’mil) | $15,173m | $16,792m | +10.7% |
| Total Expenses (S$’mil) | $5,851m | $6,500m | +11.1% |
| Net Fee Attributable to Shareholders (S$’mil) | $7,793m | $8,767m | +12.5% |
My Observations: DBS’ key financial results for the first 9 months of FY2024 compared against a year ago was also a strong one – with double digit percentage improvements seen in its net fee and commission income, other non-interest income, as well as in its net profit attributable to shareholders.
Net interest income remained stable at 4.8% year on year, a 2% growth in loans.
The 27.1% year-on-year jump in net fee and commission income to a record S$3.2 billion was led by wealth management, card, and loan-related fees.
Other non-interest income increased by 18.3% year on year to S$2.9 billon, led by treasury customer sales which reached a new high.
Total expenses went up by 11% year on year, with Citi Taiwan accounting for 4 percentage points of the increase.
Key Financial Ratios (Q2 FY2024 vs. Q3 FY2024)
As far as key financial ratios are concerned, my focus is on 3 of them – namely its net interest margin (the difference between what a bank earns from lending money and what it pays on deposits), return on equity (how much profit the bank makes for every dollar of shareholders’ equity), as well as its non-performing loans ratio (how much of a bank’s loans that may be at risk of not being fully paid back).
Unlike how I review its key financial figures in the previous section, I will be reviewing the bank’s key financial ratios by comparing the stats reported for the current quarter under review (i.e., Q3 FY2024 ended 30 September 2024) against that reported in the previous quarter (i.e., Q2 FY2024 ended 30 June 2024), as follows:
| Q2 FY2024 | Q3 FY2024 | Difference (in Percentage Points – pp) | |
| Net Interest Margin (%) | 2.14% | 2.11% | -0.03pp |
| Return on Equity (%) | 18.8% | 18.7% | -0.1pp |
| Non-Performing Loans Ratio (%) | 1.1% | 1.0% | -0.1pp |
My Observations: DBS’ key financial ratios continue to remain stable – with net interest margin at 2.11%, and return on equity at 18.7%.
Non-performing loans ratio improved by another 0.1pp to 1.0%, as non-performing loans declined by 8% from the previous quarter, as repayments, upgrades, and write-offs more than offset new non-performing asset formation
Dividend Payout to Shareholders
DBS is the only one out of the 3 Singapore-listed banks to pay out a dividend to their shareholders on a quarterly basis.
As expected, a dividend payout of 54.0 cents/share for the 3rd quarter. Compared to payout of 48.0 cents/share a year ago, this represented a 12.5% improvement.
If you are a shareholder of DBS, do take note of the following dates regarding its upcoming dividend payout:
Ex-Date: 14 November 2024
Record Date: 15 November 2024
Payout Date: 25 November 2024
CEO Mr Piyush Gupta’s Comments and Outlook (from the Bank’s Press Release)
“We achieved another record performance in the third quarter. Commercial book net interest margin was supported by reduced interest rate sensitivity of our balance sheet, while wealth management drove fee income to a new high as a benign macroeconomic and interest rate outlook buoyed investor confidence. The new buyback programme we announced today is underpinned by our strong capital position and ongoing earnings generation, and it is another affirmation of our commitment to capital management. We remain well positioned to continue delivering healthy shareholder returns.”
Closing Thoughts
It was another record breaking quarter for the Singapore headquartered back – with its net fee and commission income hitting new highs for the 3rd quarter and for the first 9 months of FY2024, treasury customer sales at a new high for the first 9 months of the year, and also its net profit attributable to shareholders for the 3rd quarter surpassing the S$3 billion mark for the first time.
The 3 key financial ratios I always look at whenever I review a bank’s results remained stable, with its net interest margin at 2.11% and return on equity at 18.7%. Further improvements can be seen in its non-performing loans ratio, to 1.0% (a positive to me).
In my opinion, the biggest news by the bank was the share buyback announcement, where S$3 billion of shares will be purchased in the open market and cancelled. However, do note that the buybacks will be carried out at the management’s discretion and subject to market conditions.
All in all, as a shareholder of DBS, I’m happy with the bank’s latest ‘report card’.
With that, I have come to the end of my review of DBS Group Holdings Limited’s latest business update for the 3rd quarter, as well as for the first 9 months of the financial year 2024 ended 30 September.
I hope you have found the contents presented in this post useful. However, do note that all the opinions expressed within are purely mine which I am sharing for educational purposes only. They do not constitute any buy or sell calls for the bank’s shares. 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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