The Smart Investor
    Facebook Instagram
    Tuesday, January 31
    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 Holdings Ltd’s Latest Earnings: 10 Key Things You Should Know
    Blue Chips

    DBS Group Holdings Ltd’s Latest Earnings: 10 Key Things You Should Know

    Chin Hui LeongBy Chin Hui LeongAugust 8, 2020Updated:August 8, 20203 Mins Read
    Facebook Twitter LinkedIn Email WhatsApp
    Share
    Facebook Twitter LinkedIn Email WhatsApp

    All eyes are on Singapore’s banks after the Monetary Authority of Singapore’s (MAS) urged the big three banks to limit their dividend payments to 60% of last year’s total annual dividend.

    DBS Group Holding Ltd (SGX: D05), who was among the first of the trio to report its earnings on Thursday, provided us with some insight.

    As expected, the bank declared a quarterly dividend of S$0.18, down 45% from the S$0.33 in its previous quarter.

    DBS Group will be offering a scrip dividend option for investors as well.

    But that’s not all that we learnt from the quarter. Here are 10 things you should know:

    1. Net interest income for the quarter fell by 5% year on year to S$2.3 billion.

    2. Loan growth came in at a healthy 7% year on year. However, net interest margin plunged to 1.62% from 1.91% a year ago due to a lower global interest rate environment.

    3. On the non-interest income side, fee and commission income declined by 11% year on year during the quarter, but was offset by a 45% year on year rise in other non-interest income.

    4. DBS Group was able to keep a lid on expenses, reporting a cost-to-income ratio that was below 40% for the quarter.

    5. As a result, profit before allowances was up 4% year on year to S$2.2 billion, a solid result given the situation.

    6. However, the bank continued to increase both its general and specific provisions to buffer against borrower stress arising from the pandemic. Total allowances rose to S$849 million for the quarter, more than triple the amount set aside a year ago.

    7. As a result, net profit fell by 22% year on year to S$1.25 billion.

    8. Meanwhile, non-performing loans (NPL) ratio remained unchanged from a year ago at 1.5%.

    9. For the outlook for the rest of 2020, CEO Piyush expects loan growth to remain resilient, led by non-trade corporate loans. Full-year net interest margin, however, is expected to contract further to around 1.6%.

    10. Meanwhile, fee income has been improving since lockdowns eased, and the bank will continue to review its cost structure to maintain a low cost-to-income ratio.

    Get Smart: The calm before the storm

    At the moment, the bank is not seeing many NPLs and does not see the need to make additional specific provisions.

    However, as the government’s Job Support Scheme tapers off, we are likely to see more loans come under pressure.

    As it stands, DBS Group has set aside S$1.94 billion in allowances and other losses during the first half of the year. The next few quarters will give us a clearer view of how many loans will slip and fall into the NPL bucket.

    As a Smart Investor, this is the metric you should be monitoring closely in the remaining months of this year.

    Special FREE Report: How You Can Make Money Investing In REITs During This Pandemic. Download your free copy HERE or just key in your email below! 

    Disclosure: Chin Hui Leong owns shares of DBS Group Holdings.

    Yahoo
    Share. Facebook Twitter LinkedIn Email WhatsApp

    Related Posts

    Merger and Acquisition

    What Makes Some Serial Acquirers So Successful

    January 30, 2023
    Data Centre (Sunlight)

    5 Key Takeaways from Mapletree Industrial Trust’s Latest Business Update

    January 30, 2023
    Screen Showing Share Prices

    Get Smart: Why You Shouldn’t Focus on Share Prices Alone

    January 29, 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.