Nine-month earnings up 13% to record SGD 2.60 billion
SINGAPORE, 1 November 2012 – DBS Group Holdings reported net earnings of SGD 856 million for third-quarter 2012, up 12% from a year ago and 6% from the previous quarter. Total income reached SGD 2 billion as fee income rose to a record and net interest income was sustained at recent highs. For the nine months, net profit rose 13% to a record SGD 2.60 billion.
Third-quarter earnings up 6% from the previous quarter
Net interest income rose 1% from the previous quarter to SGD 1.33 billion. Loans grew 1% excluding exchange translation effects to SGD 202 billion, reflecting a slowdown in the region and a concentration of maturing trade loans during the quarter. Deposits grew by 5% before exchange translation effects to SGD 240 billion, resulting in an easing of the loan-deposit ratio to 84% from 89% in the previous quarter.
Net interest margin declined five basis points to 1.67%, reflecting prudent liquidity management as well as margin pressures in China. The impact of both factors was partially offset by margin improvements in Singapore and other markets.
Non-interest income rose 8% from the previous quarter to SGD 672 million. Most of the increase was due to an 11% rise in fee income to a record SGD 422 million as contributions from loan activities, investment banking and wealth management grew. Trading income was little changed at SGD 130 million.
Total income increased 3% from the previous quarter to SGD 2.00 billion. Costs also rose 3%, to SGD 901 million, and the cost-income ratio was unchanged at 45%. Profit before allowances was 3% higher at SGD 1.10 billion.
Specific allowance charges for loans remained low at SGD 36 million or seven basis points of loans, similar to recent quarters. General allowance charges of SGD 15 million were taken during the quarter.
Nine-month earnings up 13% from a year ago
For the nine months, net earnings grew 13% from a year ago to a record SGD 2.60 billion, with return on equity rising to 11.7% from 11.3%.
Net interest income grew 13% to SGD 3.99 billion. Loans and deposits rose 12% and 11% respectively before exchange translation effects. Net interest margin eased six basis points to 1.72% in line with softer interest rates in an environment flush with liquidity.
Fee income was sustained at SGD 1.21 billion. While trade finance, wealth management and card fees rose in line with efforts to grow these annuity businesses, they were offset by lower contributions from market-related activities such as stockbroking and investment banking. Income from treasury customer flows rose 7% to SGD 719 million, accounting for 46% of total treasury income from 44% a year ago.
Total income rose 7% to a record SGD 6.11 billion as Institutional Banking’s income increased 10% to SGD 3.33 billion and Consumer Banking / Wealth Management’s income grew 7% to SGD 1.74 billion. Treasury income (excluding customer flows) fell 2% to SGD 828 million.
Expenses rose 10% to SGD 2.67 billion, reflecting mainly the full-period impact of higher headcount and investments made to support business growth. Profit before allowances rose 4% to a record SGD 3.43 billion. Total allowances fell 39% to SGD 303 million as general allowances declined in line with slower loan growth compared to a year ago.
Asset quality and capital position remain strong
Asset quality continued to be strong. The non-performing loan rate was unchanged from the previous quarter at 1.3% as non-performing assets fell 4% to SGD 2.84 billion. Allowance coverage rose to 134% from 129% in the previous quarter.
Unrealised marked-to-market gains for the available-for-sale investment portfolio increased to SGD 624 million from SGD 519 million in the previous quarter.
The total capital adequacy ratio rose from 15.4% in the previous quarter to 16.5% while the Tier-1 ratio increased from 12.8% to 13.4%. Both ratios were comfortably above regulatory requirements. The core Tier-1 ratio rose from 12.8% to 13.4%.
DBS CEO Piyush Gupta said, "We had yet another solid quarter, notwithstanding a notable slowdown in Asia and interest rate headwinds. Record fee income highlights the diversification and resiliency of our customer franchise. We are pleased that our steadfast commitment to our strategy has resulted in SGD 2.60 billion of net profits for the first nine months of the year, a record high for DBS, and a healthy 13% growth year-on-year. While the bank is well-capitalised, we continue to focus on ensuring that we manage our capital efficiently, especially with the introduction of Basel III next year."
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