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DBS hits milestone $100 billion cap on record 1QFY2024, Fed stance

Felicia Tan
Felicia Tan • 3 min read
DBS hits milestone $100 billion cap on record 1QFY2024, Fed stance
An interim dividend of 54 cents has been declared. Photo: Bloomberg
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DBS Group Holdings has hit the milestone market cap of $100 billion after its share price gained this morning following yet another record net profit of $2.96 billion for the 1QFY2024 ended March 31, 15% higher y-o-y and 24% higher q-o-q.

The 1QFY2024 net profit is also well above a Bloomberg poll of $2.465 billion for the first quarter. While the year is still young, DBS may well meet and possibly beat FY2023's record-breaking $10 billion. 

As at 9.16am, DBS shares changed hands at $35.92, up 3.01%, valuing the company at $102 billion.

DBS's earnings were released just hours after the US Federal Reserve signalled rates may be held longer because of persistent inflationary pressures.

Commercial book total income rose by 14% y-o-y to $5.31 billion as net interest income (NII), net fee and commission income, as well as treasury customer sales and other income grew on a y-o-y basis.

Commercial book NII grew by 8% y-o-y to $3.65 billion as net interest margin (NIM) expanded by 8 basis points (bps) to 2.77% from the higher interest rates. Group NIM stood at 2.14%, 2 bps higher y-o-y.

See also: Cordlife posts net loss of $11.57 mil for 1QFY2024 due to refund fulfilment

Net fee and commission income rose by 23% y-o-y to $1.04 billion, crossing the $1 billion mark for the first time. This is due to the higher wealth management fees from the stronger market sentiment and an expanded asset under management (AUM) base, as well as card fees from higher spending.

Treasury customer sales also reached a new high of $621 million, 44% higher y-o-y.

Meanwhile, market trading income fell by 9% y-o-y to $246 million due to higher funding cost.

See also: Changi Airport Group reports FY2024 earnings of $431 mil, 13.1 times higher y-o-y

NII under market trading income reported a loss of $142 million, 26% deeper than the loss of $113 million in the corresponding quarter the year before.

Non-interest income was up by 2% y-o-y to $382 million.

Total income stood at a new high of $5.56 billion, 13% higher y-o-y. Return on equity (ROE) also rose to a new high of 19.4% from 18.6% in the 1QFY2023.

During the quarter, loans grew by 1% q-o-q to $425 billion in constant-currency terms while deposits also grew by 1% q-o-q to $547 billion constant-currency terms. Current account savings account (CASA) outflows under deposits were offset by an increase in fixed deposits.

Cost-income ratio for the quarter remained stable y-o-y at 37%.

Non-performing loans (NPL) ratio remained unchanged y-o-y and q-o-q at 1.1%. Specific provisions (ECL Stage 3) rose significantly y-o-y, albeit lower q-o-q to $113 million. 

As at March 31, DBS’s allowance coverage stood at 125%. Its liquidity coverage ratio stood at 144%. Net stable funding ratio stood at 116%.

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Its common equity tier 1 (CET-1) ratio stood at 14.7%, three percentage points (ppts) higher y-o-y and 0.1 ppt higher q-o-q.

An interim dividend of 54 cents has been declared, representing a 10% y-o-y growth. While DBS maintained its 4QFY2023's dividend, the payout will include the bonus shares. The shares will be quoted ex-dividend on May 9; payment will be made on May 20.

“Our record earnings have given us a strong start to the year. We had broad-based business momentum as loans grew and both fee income and treasury customer sales reached new highs,” says DBS CEO Piyush Gupta.

“While geopolitical tensions persist, macroeconomic conditions remain resilient and our franchise is well positioned to capture business opportunities. We are optimistic that total income and earnings will be better than previously guided and we will be able to deliver another year of strong shareholder returns,” he adds.

Shares in DBS closed 12 cents higher or 0.35% up at $34.90 on April 30.

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