SINGAPORE: DBS group smashes records with S$10.3 billion in net profit for the first time in its fiscal year 2023. The bank’s net profit soared by 26% year-on-year to S$10.3 billion, The Edge Singapore reports.
This substantial growth in profit by a 22% increase in total income, reaching S$20 billion, was driven by a higher net interest margin (NIM) of 2.15% for the full year, a resurgence in fee income, and record sales in treasury services. Additionally, the return on equity (ROE) climbed to a new high of 18% from 15%.
Record-Breaking Profits
Shareholders are anticipated to applaud the board’s proposal to elevate the final dividend to 54 cents in the fourth quarter of FY2023, marking a 6-cent increase from the previous quarter.
The full-year dividend stands at S$1.92. Looking ahead, the quarterly dividend is expected to rise to 54 cents, translating into an annual dividend of S$2.16. With the closing price on Feb 2, DBS’s dividend yield sits at an attractive 7.5%.
Shareholder Rewards
In a move to enhance shareholder value further, DBS’s board has suggested a 1-for-10 bonus.
These bonus shares will qualify for dividends starting in the first quarter of FY2024 and are expected to accelerate capital returns to shareholders.
As per DBS announcement, “The stepped-up capital returns reflect the group’s strong capital position and are in line with the policy of paying sustainable dividends that rise progressively with earnings.”
Fee income for FY2023 surged by 9% year-on-year to S$3.38 billion, driven by increased fees from cards and wealth management. Treasury customer sales and other income also experienced robust growth, climbing 18% year-on-year to S$1.78 billion.
Under DBS’s commercial book business, net interest income (NII) saw a 33% rise to S$14.3 billion, propelled by an expansion in NIM to 2.76% from higher interest rates.
Despite an increase in deposit costs, the pace was slower than asset yields. Loans grew modestly by 1% to S$416 billion in constant-currency terms, excluding the contribution from Citi Taiwan.
However, trade loans witnessed a significant decline of 8%, attributed to reduced activity and unattractive pricing, while non-trade corporate loans remained stable at S$246 billion.
Expenses for the fiscal year rose by 14% year-on-year to S$8.06 billion, primarily due to increased staff costs from salary increments and a higher headcount. Profit before allowances surged 29% year-on-year to a new high of S$12.1 billion.
In the fourth quarter of FY2023, total income increased by 9% year-on-year to S$5.01 billion, driven by higher NII and fee income, resulting in a 7% rise in profit before allowances to $2.8 billion.
However, net profit declined by 9% compared to the previous quarter, which is attributed to a lower NIM, seasonally lower non-interest income, and increased expenses.
Non-performing assets decreased by 5% from the previous quarter to S$5.06 billion, with the non-performing loan (NPL) ratio improving from 1.2% to 1.1%.
DBS has allocated S$100 million from its profits to support vulnerable communities as part of its corporate social responsibility commitment. This and one-off costs for integrating Citi Taiwan contributed to a slight decline in net profit for the fourth quarter.
The bank’s management has also taken accountability for digital disruptions throughout the year, with variable compensation for the CEO and other members of the Group Management Committee being reduced by 21% from the previous year despite record profits.
DBS has pledged S$80 million towards implementing its technology uplift and resilience roadmap, aimed at pre-empting disruptions to its services and providing customers with alternative channels during such occurrences. /TISG
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