The Smart Investor
    Facebook Instagram
    Wednesday, June 7
    Facebook Instagram LinkedIn
    The Smart Investor
    • Home
    • About
      • About Us
      • Careers
    • Smart Investing
      • Getting Started
      • Investing Strategy
      • Smart Analysis
      • Smart Reads
    • Special Free Reports!
    • As Featured on BT
    • Our Services
      • Our Services
      • Subscribe now!
    • Login
    • Cart
    The Smart Investor
    Home»Blue Chips»DBS Group Declares a S$0.50 Special Dividend: 5 Highlights from the Bank’s Blockbuster Earnings
    Blue Chips

    DBS Group Declares a S$0.50 Special Dividend: 5 Highlights from the Bank’s Blockbuster Earnings

    Singapore’s largest bank pays out a bumper dividend even as it guides for single-digit loan growth this year.
    Royston YangBy Royston YangFebruary 13, 2023Updated:February 13, 20235 Mins Read
    Facebook Twitter LinkedIn Email WhatsApp
    DBS Building
    Share
    Facebook Twitter LinkedIn Email WhatsApp

    Many investors are eagerly awaiting the release of full-year 2022 (FY2022) earnings from Singapore’s three major banks.

    DBS Group (SGX: D05) is the first of the trio to report its earnings.

    The blue-chip lender did not disappoint as it announced a blowout set of financial numbers in line with the higher interest rate environment.

    The bank’s total income crossed the S$16 billion mark for the first time while its net profit chalked up a new record-high of S$8.2 billion.

    In line with the strong results, DBS also declared a special dividend of S$0.50.

    The previous time the bank declared a special dividend was back in FY2017.

    Also, for the first time, DBS split up the group’s results into “Commercial Book” and “Treasury Markets” to better reflect customer performance trends.

    Here are some highlights from the lender’s latest set of earnings.

    1. A blowout set of earnings

    For FY2022, net interest income (NII) for DBS’ commercial book segment surged 40% year on year to S$10.7 billion as the bank benefitted from rising interest rates.

    Fee income for the segment, however, dipped by 12% year on year to S$3.1 billion.

    Despite the lower fee income, total income saw a 16% year on year uplift to a record S$16.5 billion.

    With total expenses rising just 10% year on year, the lender’s profit before allowances jumped 22% year on year to S$9.4 billion.

    Net profit for FY2022 climbed 20% year on year to S$8.2 billion.

    A closer look at DBS’ fourth quarter (4Q FY2022) numbers shows that NII surged by 74% year on year to S$3.4 billion for its commercial book division as the full effect of higher interest rates kick in.

    Total income almost touched S$4.6 billion, up 41% year on year while net profit for the quarter soared 68% year on year to S$2.3 billion.

    2. A strong surge in net interest margin and income

    A higher net interest margin (NIM) contributed strongly to the rise in NII.

    Its commercial book NIM jumped to 2.11% for FY2022, up from 1.63% a year ago.

    For 4Q2022, NIM hit 2.61%, almost a full percentage point higher than the 1.65% clocked in the first quarter of this year.

    At the group level, NIM came in at 1.75% for FY2022, up 0.3 percentage points from 1.45% in FY2021.

    There is reason to believe that DBS’ NIM can stay above 2% as its 4Q FY2022 group NIM came in at 2.05% and CEO Piyush Gupta does not expect the US central bank to cut rates this year.

    He continues to expect a peak NIM of 2.25% but cautioned that NIM could come in at between 2.18% to 2.2% because of outflows to treasury bills and higher funding costs for the treasury markets division.

    3. Fee income declines year on year

    The bank’s fee income, however, dipped by 8.9% year on year to S$3.7 billion for FY2022 due to wealth management fees falling by a quarter.

    However, card fees jumped 20% year on year to S$858 million in line with the increase in spending on overseas holidays as borders reopened.

    Loan and transacted-related fees also improved year on year to offset some of the declines from wealth management.

    China’s reopening should provide a much-needed boost to fee income, with CEO Gupta expecting double-digit year on year fee income growth in FY2023.

    Elsewhere, the wealth management division saw its total income rise 20% year on year to a record high of S$3.3 billion.

    DBS saw continued inflows that boosted its assets under management to a new high of S$297 billion, up 9% year on year.

    4. Healthy loan growth with low provisions

    Customer loans continued to climb in FY2022, inching up 1% year on year to S$414.5 billion.

    This rate was, however, a sharp slowdown compared to FY2021’s 10% year on year rise.

    The strong Singapore dollar was responsible for a three-percentage-point headwind to loan growth.

    DBS ended the year with S$335 million in specific provisions, down a third from the S$499 million provided for in FY2021.

    Looking ahead, Mr Gupta has projected a mid-single-digit year on year loan growth for FY2023, but this guidance could change depending on how businesses react to structurally-higher interest rates.

    5. Higher core quarterly dividend along with a special dividend

    In line with the bank’s blockbuster results, it has declared a special dividend of S$0.50 per share.

    DBS’ core quarterly dividend was also raised from S$0.36 to S$0.42 in a show of confidence about its prospects.

    The total dividend to be paid out for 4Q FY2022 is S$0.92 if approved at the bank’s annual general meeting, and FY2022’s total dividend stands at S$2 per share.

    Looking ahead, the bank’s core annual dividend has increased from S$1.44 to S$1.68, giving its shares a forward dividend yield of 4.7%.

    Our team has spent decades scouring SGX for stocks. And we think dividends could be the answer to rising inflation and market uncertainty in 2023. With our newest FREE report, you’ll have everything you need to find, keep and make more money from dividend stocks. Click here to download it for free.

    Follow us on Facebook and Telegram for the latest investing news and analyses!

    Disclosure: Royston Yang owns shares of DBS Group.

    Yahoo
    Share. Facebook Twitter LinkedIn Email WhatsApp

    Related Posts

    Four Spring Rolls on Napkin

    4 Dividend-Paying Singapore Food and Beverage Stocks That Could Deliver Delicious Returns

    June 6, 2023
    Oil Rig at Sunset

    Seatrium Has Replaced Keppel DC REIT on the Straits Times Index: 8 Things to Know About the Offshore & Marine Company

    June 6, 2023
    Lady Videoconferencing with Colleagues

    How Bad is Zoom’s Stock-Based Compensation?

    June 5, 2023
    Facebook Instagram LinkedIn Telegram
    • Careers
    • Disclaimer & Privacy Policy
    • Subscription Terms of Service
    © 2023 The Smart Investor. All Rights Reserved. The Smart Investor, thesmartinvestor.com.sg, an investment education website managed by The Investing Hustle Pte Ltd (Company Reg No. 201933459Z) is not licensed or otherwise regulated by the Monetary Authority of Singapore, and in particular, is not licensed or regulated to carry on business in providing any financial advisory service. Accordingly, any information provided on this site is meant purely for informational and investor educational purposes and should not be relied upon as financial advice. No information is presented with the intention to induce any reader to buy, sell, or hold a particular investment product or class of investment products. Rather, the information is presented for the purpose and intentions of educating readers on matters relating to financial literacy and investor education. Accordingly, any statement of opinion on this site is wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader. The Smart Investor does not recommend any particular course of action in relation to any investment product or class of investment products. Readers are encouraged to exercise their own judgment and have regard to their own personal needs and circumstances before making any investment decision, and not rely on any statement of opinion that may be found on this site.

    Type above and press Enter to search. Press Esc to cancel.