DBS Group Q3 2024 $D05 (-0.5%)

Financial performance:

• Revenue and net profit: Revenue in Q3 2024 amounted to SGD 5.75 billion, an increase of 11% year-on-year. Net profit increased by 15% to SGD 3.03 billion.
• Nine-month results: For the first nine months of 2024, revenue increased by 11% to SGD 16.8 billion, while net profit increased by 11% to SGD 8.79 billion.
• Special items: A new SGD 3 billion share buyback program was launched, supporting the company's capital strategy.

Balance sheet overview:

• Assets and liabilities: Total assets amounted to SGD 789.6 billion, with customer loans accounting for SGD 418.1 billion and customer deposits SGD 545 billion.
• Liquidity and leverage: The liquidity ratio was 144% and the net stable funding ratio was 115%. The Common Equity Tier 1 (CET 1) ratio was 17.2%, indicating a strong capital base.
• Depreciation and amortization: Non-performing assets (NPL) decreased by 8% quarter-on-quarter to SGD 4.68 billion.

Income structure:

• Revenue sources: The main income drivers were net interest income of SGD 3.80 billion and net fee and commission income of SGD 1.11 billion.
• Cost development: Expenses increased by 10% year-on-year, with the acquisition of Citi Taiwan accounting for three percentage points of the increase.
• Margin: The cost-to-income ratio remained stable at 39%.

Cash flow overview:

• Investment and financing activities: The new share buyback program shows significant activity in terms of capital returned to shareholders.

Key figures and profitability metrics:

• Return on equity (ROE): 18.8% for the first nine months.
• Net interest margin (NIM): Stable net interest margin of 2.83% for the commercial portfolio.
• NPL ratio: Decrease to 1.0%, indicating improved credit quality.

Segment information:

• Segment performance: Wealth Management fee income increased 18% to SGD 609 million, while trading income reached SGD 331 million, the highest level in ten quarters.
• Highest revenue segment: Wealth Management was the main driver of fee growth.

Competitive position:

• Market position: The company achieved a record performance in the third quarter, driven by strong results in Wealth Management and Trading.
• Industry trends: Benefited from market volatility in areas such as FX, interest rates and equity derivatives.

Forecasts and management comments:

• Outlook: Net interest income is expected to remain at 2024 levels, with a slight decline in interest margin offset by loan growth.
• Strategic objectives: The share buyback program underscores the capital management strategy and focus on shareholder returns.

Risks and opportunities:

• Financial risks: Global minimum tax of 15% is expected to impact net profit.
• Opportunities: Continued growth in wealth management fees and treasury client sales.

Summary of results:

Positives:

Record net profit of SGD 3.03 billion in Q3 2024.

Strong growth in Wealth Management fees, up 18%.

Highest trading profit in ten quarters, demonstrating trading strength.

Stable cost/income ratio at 39%, indicating efficient cost management.

Introduction of SGD 3 billion share buyback program as part of capital strategy.

Negative aspects:

10% year-on-year increase in expenses, partly driven by the integration of Citi Taiwan.

Impact of global minimum tax, which is expected to reduce net profit.

Credit risk hedges on 14 basis points of loans, indicating certain risks in the loan portfolio.

Cost growth from the integration of Citi Taiwan, which is a short-term charge.

No detailed cash flow trends provided, making transparency difficult.