DBS Group Holdings has reported a net profit of $2.9 billion for the 1QFY2025 ended March 31, 2% lower y-o-y, but slightly above the Bloomberg estimate of $2.868 billion. The slight decline y-o-y was due to higher tax expenses from the implementation of the 15% global minimum tax.
The bank's return on equity (ROE) during the quarter stood at 17.3%.
Profit before tax stood at a record $3.44 billion, 1% higher y-o-y and 16% higher q-o-q, as total income climbed to a new high thanks to robust business growth.
During the quarter, total income rose by 6% y-o-y to $5.91 billion with growths seen in its commercial book total income and markets trading income.
Under the commercial book, net interest income (NII) rose by 2% y-o-y to $3.72 billion as growth in the balance sheet more than offset a nine-basis-point decline in its net interest margin (NIM) of 2.68%. Net fee and commission income spiked by 22% y-o-y to $1.28 billion driven by wealth management. Meanwhile, treasury customer sales and other income fell by 12% y-o-y to $548 million.
NII under markets trading income saw a narrower loss of $38 million from $142 million in the 1QFY2024 while non-interest income grew by 3% y-o-y to $401 million.
Loans were up by 2% q-o-q to $435 billion while deposits were up by 3% q-o-q to $576 billion. The bank’s current account savings account (CASA) ratio improved to 53%.
Group NIM stood at 2.12%.
During the quarter, the bank took general allowances of $205 million as a “prudent measure” to strengthen its general provision (GP) reserves amid the ongoing macroeconomic and geopolitical uncertainty. As such, its allowance coverage will increase to 137% and to 230% after considering collateral.
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Non-performing assets (NPA) fell by 3% q-o-q due to lower new NPA formation and higher upgrades. The bank’s non-performing loans (NPL) ratio stood at an unchanged 1.1% with special provisions (SPs) of 10 basis points.
In 1QFY2025, DBS’s expenses rose by 6% y-o-y, although its cost-income ratio remained stable at 37%.
As at March 31, DBS’s liquidity coverage ratio stood at 145% while its net stable funding ratio stood at 115%. Both remain above regulatory requirements.
The bank’s reported common equity tier 1 (CET-1) ratio was 17.4% based on transitional arrangements. On a fully phased-in basis, the ratio would be 15.2%.
“We had a strong start to the year with broad-based business growth led by wealth management, and ROE above 17% despite the impact of the global minimum tax,” says CEO Tan Su Shan who stepped into the role in March.
“Recent escalations in trade tensions have heightened macroeconomic risks and market volatility. As uncertainty persists, we will stay nimble to capture opportunities while prudently managing risks,” she adds. “We have strengthened our general allowance reserves, and together with our strong capital and liquidity positions, we have a solid foundation to continue supporting customers.”
In her CEO observations, Tan notes that the global challenges spanning trade disruption, slowdown in global growth, interest rate uncertainty, weaker market sentiment and credit stresses may lead to opportunities for DBS in the form of trade shifts, new growth corridors, Casa growth, among others. Tan also sees continued wealth inflows as well as trading opportunities and client hedging demand amid these challenges. While she expects business momentum to be resilient in April, this may see risks from the heightened global uncertainties.
For the quarter, the board has declared a total dividend of 75 cents comprising its ordinary dividend of 60 cents and a capital return dividend of 15 cents. The estimated dividend payable is $2.13 billion.
Shares in DBS closed 23 cents lower or 0.54% down at $42.76 on May 7.
