DBS Group (D05) Q2 2024 (Q&A) earnings summary

Executive summary

• First-half 2024 net profit rose 9% year-over-year to a record $5.76 billion, with total income up 11% to $11.04 billion, driven by broad-based growth in net interest income, fee income, and treasury customer sales.

• Second-quarter net profit increased 4% year-over-year to $2.80 billion, with ROE at 18.2% and total income up 9% to $5.48 billion.

• Wealth management fees and income remained strong, with net new money inflows, higher-margin product shifts, and AUM up 24% to $396 billion, though some outflows occurred for property purchases and higher-yielding deposits.

• Board and senior management continuity expected to ensure stability in capital management and strategic direction during CEO transition.

• Asset quality remained resilient, with NPL ratio stable at 1.1% and allowance coverage at 129%.

Financial highlights

• Net interest income for 1H24 rose 6% year-over-year to $7.42 billion, with net interest margin for the commercial book up 5 bps to 2.83% in 2Q24.

• Net fee and commission income grew 25% to $2.09 billion, led by wealth management and card fees.

• Markets trading income increased 6% YoY in 2Q, but was down 3% YoY for 1H.

• Expenses rose 11–12% YoY, partly due to Citi Taiwan integration, which accounted for five percentage points of the increase.

• Profit before allowances and amortisation reached $6.79 billion, up 10% year-over-year.

Outlook and guidance

• Management highlights resilience against economic slowdown and lower interest rates, citing high general allowance reserves, reduced interest rate sensitivity, strong capital, and ample liquidity.

• NIM sensitivity of SGD 4 million per basis point is modeled to hold through mid-next year, with only marginal changes expected beyond that as fixed assets mature and deposit mix evolves.

• CASA outflows slowed, and fixed deposit growth offset declines, supporting deposit stability.

• As rates decline, funding drag on the markets book will reduce, and NIM sensitivity may increase if deposits shift back from fixed to CASA.

• Heightened uncertainty from market volatility and geopolitical tensions noted.