SINGAPORE: Despite a “perfect storm” of uncertainties, a diversification of its income stream helped DBS to deliver a “solid” set of results for the second quarter, said its chief executive officer Tan Su Shan on Thursday (Aug 7).
The bank’s net profit for the April to June quarter was S$2.82 billion (US$2.2 billion), up 1 per cent from the same period a year ago and beating analysts’ estimates.
It declared an ordinary dividend of S$0.60 per share and a capital return dividend of S$0.15 per share for the period.
Lifted by the earnings report, DBS shares soared to all-time highs on Thursday and briefly hit the S$50 mark at 3.30pm. It has since given up some of these gains and was last seen trading at S$49.75, up 1.8 per cent, at 4.49pm.
The second-quarter results marked Ms Tan’s first quarter at the helm as the CEO of Singapore’s largest bank, after taking over from Mr Piyush Gupta on Mar 28.
Speaking at a press conference, Ms Tan described the past quarter as a tough one marked by several factors “that would incur the perfect storm”.
These included a plunge in key interest rates in Singapore and Hong Kong, United States President Donald Trump’s “Liberation Day” tariffs on Apr 2 and the uncertainties that followed, as well as global geopolitical tensions.
“But our team delivered pretty resilient financial numbers … and I'd like to think of it as when the markets hit you … you mitigate those hits by increasing your volume, for example,” said Ms Tan.
“And if there (is) increased volatility, which there was, then you mitigate that by having a good trading income and you hedge when you can.”
The bank has continued to build resiliency by, for example, taking on “proactive balance sheet hedging” to help cushion the impact of sharp declines in interest rates.
It also powered ahead with growth areas like wealth management and digitalisation, all lending well to the bank’s ability to mitigate market volatilities.
“The diversification of (your) income stream (and) creating a fortress balance sheet to mitigate whatever the markets throw at you is important,” said Ms Tan.
Strong performers for the bank in the second quarter included fee income and treasury customer sales, which rose to their second-highest quarterly levels.
Ms Tan described the bank’s fee income as “firing on all cylinders”.
Fees for the wealth management segment surged to S$649 million in the second quarter, up 25 per cent from S$518 million a year earlier, driven by broad-based growth in investment products and bancassurance. Investment banking fees were also higher – at S$31 million in the second quarter, from S$19 million a year ago – due to increased debt and equity capital market activity.
Markets trading performance also strengthened, while deposits saw strong growth – a trend that will likely continue through the year.
Commenting on the US tariffs, Ms Tan said the bank was “not affected by the first-order impact of the US tariffs”, although it did decide to be “conservative” and set aside S$205 million of general allowances in light of the escalation in macroeconomic and geopolitical uncertainty.
The bank also sees “almost negligible” first-order impact from the latest US tariffs imposed on India for now, as it is not exposed to the affected sectors such as textiles, jewellery and apparel.
Singapore, which is DBS’ biggest market, faces the baseline 10 per cent tariff.
On whether the US’ trade deals with various countries might mean an improvement in the business outlook ahead, Ms Tan said: “It’s a bit of a moving target, because, you know, every day you have a new tariff number.”
That said, she remains hopeful that some of the business activities that were paused amid the uncertainty in the second quarter will resume in the months ahead.
“Business people don’t like uncertainty, so (in the second quarter), we did see people press the pause button,” she said.
“(For the third quarter), I’m hopeful that some of that will come back. We are beginning to see that coming in.”
Looking ahead, DBS has maintained its 2025 targets, which include group net interest income to be slightly above 2024 levels and net profit to be below 2024 levels due to the impact of the global minimum tax.
While external uncertainties remain, DBS sees opportunities ahead.
“Our proactive management of the balance sheet puts us in a good position to navigate the interest rate cycle, while strong capital and liquidity ensure we are well-placed to support customers,” Ms Tan said.
For example, in the realm of wealth management, the bank is seeing a “real need” for long-term estate planning given that a “massive wealth transfer” is taking place.
“People are planning for their future generation, no matter rich or not so rich,” said Ms Tan. “We’re seeing that growth (is) very solid across all markets – North Asia, South Asia, international, et cetera.”
Digital assets is another area that DBS sees potential in, describing itself as being an active player since 2021 with the capability to list a range of tokenised offerings and having its own digital asset exchange.
Noting that there have been positive changes in regulations, such as the US passing a regulatory framework for US dollar-pegged cryptocurrency tokens known as stablecoins, Ms Tan said the bank “has picked up the pace there” to be nimble in capitalising on potential opportunities.
“We want to be a trusted, regulated bank that plays in the digital asset space. So, we want to innovate, but we also want to do this responsibly,” she added.
“We’ve had a head start since 2021. We want to continue to build on our head start, build on our experience, build our expertise to be a trusted digital player in this ecosystem.”
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The bank’s net profit for the April to June quarter was S$2.82 billion (US$2.2 billion), up 1 per cent from the same period a year ago and beating analysts’ estimates.
It declared an ordinary dividend of S$0.60 per share and a capital return dividend of S$0.15 per share for the period.
Lifted by the earnings report, DBS shares soared to all-time highs on Thursday and briefly hit the S$50 mark at 3.30pm. It has since given up some of these gains and was last seen trading at S$49.75, up 1.8 per cent, at 4.49pm.
The second-quarter results marked Ms Tan’s first quarter at the helm as the CEO of Singapore’s largest bank, after taking over from Mr Piyush Gupta on Mar 28.
Speaking at a press conference, Ms Tan described the past quarter as a tough one marked by several factors “that would incur the perfect storm”.
These included a plunge in key interest rates in Singapore and Hong Kong, United States President Donald Trump’s “Liberation Day” tariffs on Apr 2 and the uncertainties that followed, as well as global geopolitical tensions.
“But our team delivered pretty resilient financial numbers … and I'd like to think of it as when the markets hit you … you mitigate those hits by increasing your volume, for example,” said Ms Tan.
“And if there (is) increased volatility, which there was, then you mitigate that by having a good trading income and you hedge when you can.”
Related:
The bank has continued to build resiliency by, for example, taking on “proactive balance sheet hedging” to help cushion the impact of sharp declines in interest rates.
It also powered ahead with growth areas like wealth management and digitalisation, all lending well to the bank’s ability to mitigate market volatilities.
“The diversification of (your) income stream (and) creating a fortress balance sheet to mitigate whatever the markets throw at you is important,” said Ms Tan.
Strong performers for the bank in the second quarter included fee income and treasury customer sales, which rose to their second-highest quarterly levels.
Ms Tan described the bank’s fee income as “firing on all cylinders”.
Fees for the wealth management segment surged to S$649 million in the second quarter, up 25 per cent from S$518 million a year earlier, driven by broad-based growth in investment products and bancassurance. Investment banking fees were also higher – at S$31 million in the second quarter, from S$19 million a year ago – due to increased debt and equity capital market activity.
Markets trading performance also strengthened, while deposits saw strong growth – a trend that will likely continue through the year.
Commenting on the US tariffs, Ms Tan said the bank was “not affected by the first-order impact of the US tariffs”, although it did decide to be “conservative” and set aside S$205 million of general allowances in light of the escalation in macroeconomic and geopolitical uncertainty.
The bank also sees “almost negligible” first-order impact from the latest US tariffs imposed on India for now, as it is not exposed to the affected sectors such as textiles, jewellery and apparel.
Singapore, which is DBS’ biggest market, faces the baseline 10 per cent tariff.
On whether the US’ trade deals with various countries might mean an improvement in the business outlook ahead, Ms Tan said: “It’s a bit of a moving target, because, you know, every day you have a new tariff number.”
That said, she remains hopeful that some of the business activities that were paused amid the uncertainty in the second quarter will resume in the months ahead.
“Business people don’t like uncertainty, so (in the second quarter), we did see people press the pause button,” she said.
“(For the third quarter), I’m hopeful that some of that will come back. We are beginning to see that coming in.”
Related:
OPPORTUNITIES AHEAD
Looking ahead, DBS has maintained its 2025 targets, which include group net interest income to be slightly above 2024 levels and net profit to be below 2024 levels due to the impact of the global minimum tax.
While external uncertainties remain, DBS sees opportunities ahead.
“Our proactive management of the balance sheet puts us in a good position to navigate the interest rate cycle, while strong capital and liquidity ensure we are well-placed to support customers,” Ms Tan said.
For example, in the realm of wealth management, the bank is seeing a “real need” for long-term estate planning given that a “massive wealth transfer” is taking place.
“People are planning for their future generation, no matter rich or not so rich,” said Ms Tan. “We’re seeing that growth (is) very solid across all markets – North Asia, South Asia, international, et cetera.”
Digital assets is another area that DBS sees potential in, describing itself as being an active player since 2021 with the capability to list a range of tokenised offerings and having its own digital asset exchange.
Noting that there have been positive changes in regulations, such as the US passing a regulatory framework for US dollar-pegged cryptocurrency tokens known as stablecoins, Ms Tan said the bank “has picked up the pace there” to be nimble in capitalising on potential opportunities.
“We want to be a trusted, regulated bank that plays in the digital asset space. So, we want to innovate, but we also want to do this responsibly,” she added.
“We’ve had a head start since 2021. We want to continue to build on our head start, build on our experience, build our expertise to be a trusted digital player in this ecosystem.”
Continue reading...