DBS Group (D05) Q2 2024 (Q&A) earnings summary

Executive summary

• First-half 2024 net profit rose 9% year-over-year to a record $5.76 billion (SGD 5.76 billion), with total income up 11% to $11.04 billion, driven by broad-based growth in net interest income, fee income, and treasury customer sales.

• Second-quarter net profit increased 4% year-over-year to $2.80 billion (SGD 2.80 billion), with ROE at 18.2% and total income up 9% to $5.48 billion.

• Wealth management fees and net new money inflows remained strong, with a shift to higher-margin investment products and some outflows for property purchases and higher-yielding deposits elsewhere.

• Board and senior management continuity expected to ensure stability in capital management and strategic direction during CEO transition.

• Asset quality remained resilient, with NPL ratio stable at 1.1% and allowance coverage at 129%.

Financial highlights

• Net interest margin for the commercial book rose 5 bps year-over-year to 2.83% in 2Q24; group NIM was 2.14%.

• Net fee and commission income grew 25% to $2.09 billion, led by wealth management and card fees.

• Expenses rose 11–12% year-over-year, with Citi Taiwan accounting for five percentage points of the increase.

• Cost-income ratio was 40% for 2Q24 and 39% for 1H24.

• Profit before allowances and amortisation reached $6.79 billion, up 10% year-over-year.

Outlook and guidance

• Management highlighted resilience against economic slowdown and lower interest rates, citing high allowance reserves, strong capital, and ample liquidity.

• NIM sensitivity of SGD 4 million per basis point is modeled to hold through mid-next year, with only marginal changes expected beyond that as fixed assets mature and deposit mix evolves.

• CASA outflows slowed, and fixed deposit growth offset declines, supporting deposit stability.

• Heightened uncertainty from market volatility and geopolitical tensions noted.

• Wealth management income growth in July remained strong, with August too early to call.