DBS Group (D05) H2 2021 (Q&A) earnings summary

Executive summary

• Record 2021 net profit of SGD 6.80 billion, up 44% YoY and 6% above 2019; ROE of 12.5% was the second-highest in more than a decade.

• Strong fee and trading income and lower allowances offset substantial net interest income pressure from pandemic-era rate cuts.

• Strategic expansion across India, China and Taiwan, plus digital ventures, were positioned as additional growth engines for the coming years.

Financial highlights

• Total income was SGD 14.3 billion, down 2% YoY; reported net profit was SGD 6.805 billion versus SGD 4.721 billion in 2020.

• Adjusted net profit excluding one-time items was SGD 6.801 billion; one-time items included a SGD 104 million SZRCB transaction gain and a SGD 100 million charitable contribution.

• Net interest income fell 7% to SGD 8.44 billion; net fee income rose 15% to a record SGD 3.52 billion, while Treasury Markets trading income reached SGD 1.51 billion, up 5%.

• Loans grew 9% in constant-currency terms to SGD 409 billion; deposits increased 7% to SGD 502 billion, with CASA up SGD 41 billion and a record 76% deposit mix.

• Expenses rose 5% to SGD 6.47 billion; excluding LVB and prior-year government grants, underlying expenses increased 1%.

Outlook and guidance

• 2022 loan growth was expected to exceed mid-single digits and fee income to grow at a double-digit rate; rate increases were expected to lift earnings progressively.

• Asset quality was expected to remain resilient and total allowances low; cost discipline would continue alongside investment for future growth.

• A 1 percentage-point rise in USD rates was estimated to increase annual net interest income by SGD 1.8–2.0 billion, versus SGD 1.4 billion previously.

• The Taiwan consumer banking acquisition was expected to complete in mid-2023 and be immediately accretive to earnings and ROE after completion.

• LVB, SZRCB and Citi Taiwan transactions were projected to add SGD 1.2–1.3 billion in revenue and SGD 0.5 billion to the bottom line by 2024.