Dah Sing Banking Group (2356) H1 2024 earnings summary

Executive summary

• Profit attributable to shareholders rose 26% year-over-year to HK$1.4 billion, driven by higher asset yields, strong contribution from Bank of Chongqing, and a significant reduction in impairment on this investment.

• Net interest income increased 12% year-over-year, supported by a higher net interest margin and mild loan growth.

• Non-interest income surged 77% year-over-year, mainly from higher fee, commission, and trading income.

• Operating expenses rose 4% year-over-year, reflecting increased staff for bancassurance sales.

• Credit impairment losses increased, with higher provisions for Hong Kong real estate and unsecured lending, but lower additional provisions for Mainland China property exposures compared to the previous half-year.

Financial highlights

• Net interest income: HK$2,538.7 million, up 11.9% year-over-year.

• Net fee and commission income: HK$603.4 million, up 59.8% year-over-year.

• Net trading income: HK$119.4 million, up from HK$6.5 million year-over-year.

• Operating profit before impairment: HK$1,691.9 million, up 46.1% year-over-year.

• Credit impairment losses: HK$544.0 million, up 246.7% year-over-year.

• Profit attributable to shareholders: HK$1,396.1 million, up 25.6% year-over-year.

• Interim dividend: HK$0.27 per share, up from HK$0.11 per share, payable on 26 September 2024.

• Basic earnings per share: HK$0.99 (2023: HK$0.79).

• Cost-to-income ratio: 48.5% (2023: 57.0%).

• Net interest margin: 2.09% (2023: 1.93%).

• Return on average total assets (annualised): 1.1%.

• Return on average shareholders' funds (annualised): 8.5%.

• Loan-to-deposit ratio: 66.5% (2023: 68.2%).

Outlook and guidance

• US Federal Reserve rate cuts expected in the second half may support external demand and investment.

• Loan demand remains soft, but potential rate cuts could gradually improve economic and credit conditions.

• Credit costs are expected to remain high for the rest of 2024.

• The Group will continue to manage business conservatively amid ongoing economic uncertainty.

• Opportunities for business growth exist if core markets improve.