DBS Group (D05) Q3 2024 (Q&A) earnings summary

Executive summary

• Management discussed flexible capital return strategies, including share buybacks, special dividends, and dividend step-ups, with a new SGD 3 billion buyback announced and record net profit for 3Q and nine months.

• Total income rose 11% YoY in 3Q to SGD 5.75 billion, driven by broad-based growth, especially in wealth management and markets trading.

• Asset-liability management remains dynamic, with ongoing duration extension and yield pickup, but future benefit is expected to moderate as older, low-yield assets roll off.

• Wealth management continues to be a key growth driver, with record investment AUM ratios, strong net new money inflows, and ongoing expansion of relationship managers.

• The bank maintains a cautious stance on risk, with significant general provisions retained, ongoing stress testing, and improved asset quality as NPL ratio declined to 1.0%.

Financial highlights

• 3Q24 net profit reached SGD 3.03 billion, up 15% YoY; total income at SGD 5.75 billion, up 11% YoY, with commercial book NIM stable at 2.83%.

• Fee income hit a new high, led by a 55% rise in wealth management fees; markets trading income doubled YoY to SGD 331 million.

• Cost-income ratio stable at 39% for 3Q and nine months; expenses rose 10% YoY.

• Allowance coverage rose to 135%, with specific allowances at 14bp for 3Q and 11bp for nine months.

• Buyback capacity remains for another SGD 3-5 billion before regulatory thresholds; CET-1 ratio at 17.2% transitional and 15.2% fully phased-in.

Outlook and guidance

• 2025 net interest income expected to be around 2024 levels, with a slight NIM decline offset by loan growth; non-interest income growth projected in high single digits.

• Cost-income ratio expected in the low-40% range; pretax profit to be around 2024 levels, but net profit to be lower due to a 15% global minimum tax.

• Loan growth expected at 3%-5% next year, with constructive outlook due to strong pipelines and sectoral demand.

• Expense growth targeted to slow to around 5.1% after integration of Citi Taiwan.

• Management remains confident in delivering healthy shareholder returns amid a benign macroeconomic and interest rate outlook.