DBS Group (D05) H2 2022 (Q&A) earnings summary

Executive summary

• FY22 delivered record total income of SGD 16.5bn, up 16% YoY, and record net profit of SGD 8.19bn, up 20%; ROE reached 15%.

• Higher rates and structural digital transformation supported earnings, while weaker wealth management and investment banking fees weighed on non-interest income.

• Loans grew 4% in constant-currency terms to SGD 415bn; asset quality improved, with the NPL ratio at 1.1% versus 1.3% in FY21.

Financial highlights

• Net interest income rose 30% to SGD 10.9bn; non-interest income fell 3% to SGD 5.56bn, and expenses increased 10% to SGD 7.09bn.

• Profit before allowances reached SGD 9.41bn; profit before tax was SGD 9.38bn, versus SGD 7.78bn in FY21.

• Net fee income declined 12% to SGD 3.09bn; card fees grew 20% to SGD 858m, while wealth management fees fell 26% to SGD 1.33bn and investment banking fees fell 44% to SGD 121m.

• Basic and diluted EPS rose to SGD 3.15 from SGD 2.61; total income exceeded SGD 16bn for the first time.

Outlook and guidance

• FY23 loans expected to grow at a mid-single-digit rate; fee income expected to rise by double digits as wealth management recovers and travel spending supports card fees.

• FY23 full-year NIM expected to be significantly higher due to base effects and net benefits from further rate increases, at least in the first months of the year.

• Specific allowance charges expected below the through-the-cycle average of ~20 bps; another record performance expected if forecasts hold.

• ROE expected to remain above 15% in the foreseeable future if interest rates do not return to the unusually low levels of most of the prior decade.