DBS Group Holdings’ net profit for 2QFY2025 ended June 30 rose 1% y-o-y to $2.82 billion, 1% above consensus. Net profit for 1HFY2025 was slightly lower y-o-y at $5.72 billion compared to $5.76 billion this time last year.
2QFY2025 total income rose 5% y-o-y to $5.73 billion. Net interest income was 2% higher y-o-y at $3.65 billion, while group net interest margin (NIM) fell 7 basis points (bps) q-o-q and 9 bps y-o-y to 2.05% in 2QFY2025.
Commercial book net interest income (NII) fell 4% y-o-y to $3.63 billion in 2QFY2025 due to a 28 bps decline in NIM to 2.55% from US Federal Reserve rate cuts and lower Singapore Overnight Rate Average (Sora) and Hong Kong Interbank Offered Rate (Hibor).
For 2QFY2025, non-interest income grew 10% y-o-y to $2.08 billion, driven by higher fee income, treasury customer sales and markets trading gain. Fee income and treasury customer sales rose to their second-highest quarterly levels.
Commercial book net fee income rose 11% y-o-y to $1.17 billion. The increase was largely due to wealth management fees, which rose 25% y-o-y to $649 million from broad-based growth in investment products and bancassurance. Investment banking fees were also higher from increased debt and equity capital market activity.
Commercial book other non-interest income increased 9% y-o-y to $522 million. Excluding non-recurring items a year ago, it rose 18% y-o-y driven by strong treasury customer sales to both wealth management and corporate customers.
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Markets trading income more than doubled y-o-y to $418 million from higher contributions across a range of activities, benefitting from lower funding costs and a more conducive trading environment. Expenses increased 5% y-o-y to $2.27 billion led by higher staff costs.
The cost-income ratio was stable at 40%.
Loans rose 4% y-o-y in constant-currency terms to $433 billion, led by non-trade corporate loans from broad-based growth across industries. Deposits increased 7% y-o-y in constant-currency terms to $574 billion, with the current account and savings account (Casa) ratio improving to 52%.
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Surplus deposits were deployed into liquid assets, says DBS on Aug 7. “This was accretive to net interest income and return on equity but modestly reduced net interest margin.”
First-half results
For 1HFY2025, total income rose 5% y-o-y to a new high of $11.6 billion. Return on equity was 17.0%, while return on tangible equity was 18.8%.
DBS says asset quality continued to be resilient, with the non-performing loan (NPL) ratio improving from 1.1% this time last year to 1.0%.
Specific allowances were at 15 bps of loans for 2QFY2025 and 12 bps of loans for 1HFY2025.
As at June 30, total non-performing assets fell 8% from a year ago to $4.69 billion.
Over the first six months, loans grew 3% y-o-y and deposits increased 5% y-o-y in constant-currency terms.
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1HFY2025 commercial book net fee income rose 17% y-o-y to a record $2.44 billion, led by a 30% increase in wealth management fees to $1.37 billion. Loan-related fees rose 11% to a record $412 million.
Investment banking and transaction service fees were also higher, says DBS. Commercial book other non-interest income declined 3% y-o-y to $1.07 billion. Excluding non-recurring items in 1HFY2024, it grew 11% from record treasury customer sales.
Markets trading income increased 80% y-o-y in 1HFY2025 to $781 million, reflecting lower funding costs and a more conducive trading environment.
For the first half, consumer banking and wealth management income rose 4% y-o-y to $5.28 billion, underpinned by higher net new money inflows and stronger investment product and bancassurance sales.
The gains were partially offset by the impact of lower interest rates on deposit income.
Institutional banking income fell 4% y-o-y to $4.51 billion as a decline in cash management income due to lower interest rates more than offset higher income from treasury product sales.
Markets trading delivered its strongest performance in four years during 1HFY2025, with income rising to $781 million.
Balance sheet
Specific allowances were $150 million or 15 bps of loans for 2QFY2025, bringing the 1HFY2025 total to $270 million, or 12 bps.
Allowance coverage stood at 137% and at 236% after considering collateral.
Liquidity continued to be ample, says the bank, with the liquidity coverage ratio of 147% and the net stable funding ratio of 114% both well above regulatory requirements of 100%.
The reported Common Equity Tier-1 (CET-1) ratio was 17.0% based on transitional arrangements, while the pro-forma ratio on a fully phased-in basis was 15.1%. The leverage ratio of 6.5% was more than twice the regulatory minimum of 3%.
The board has declared an ordinary dividend of 60 cents per share and a capital return dividend of 15 cents per share for the second quarter, bringing the 1HFY2025 amounts to $1.20 per share and 30 cents per share respectively. The ordinary dividend is up from $1.08 per share this time last year.
DBS CEO Tan Su Shan says: “We delivered a strong set of results for the first half despite the challenging environment. Our ability to manage the balance sheet nimbly, grow deposits and capture market opportunities helped offset the external pressures. Net interest income, fee income and treasury customer sales reached record levels, while markets trading performance was the strongest in four years. Return on equity was 17% even after the impact of the global minimum tax, reflecting the benefit of our investments to deepen customer relationships across wealth management and corporate banking.”
She adds: “While external uncertainties remain, we have opportunities ahead of us. Our proactive management of the balance sheet puts us in a good position to navigate the interest rate cycle, while strong capital and liquidity ensure we are well placed to support customers.”
DBS will hold a results briefing later today. DBS shares closed 61 cents higher, or 1.26% up, at $48.85 on Aug 6, up 11.12% year to date.
