DBS full-year profit surged 28% to $5.63b

Fee income hit $2.78b as led by card and wealth management.

DBS capped the volatile year on strong financial footing as profits rose 28% YoY to $5.63b in 2018 with return on equity hitting a record-high at 12.1%. In Q4, the bank’s profits rose 8% to $1.32b. 

Loans rose 6% in constant-currency terms to $345b as non-trade corporate loans rose 12%. This offset a weaker 3% growth in consumer loans which took a beating from the measures to cool the property market in July. Similarly, trade loans fell 6% as maturing exposures were not replaced due to unattractive pricing.

Also read: Singapore bank loan growth to slow to 3% in 2019

Net fee income rose 6% to $2.78b led by card fees which hit $714m and wealth management fees of $1.14b. Transaction service fees increased 5% to $647m as a 13% rise in cash management fees was moderated by lower trade finance fees.

On the other hand, investment banking fees plunged 41% to $128m as debt and equity capital activities took a beating from the economic uncertainties.

Also read: Singapore IPO proceeds plunge to $730m in 2018

By business unit, the income of the Consumer Banking / Wealth Management (CBG/WM) rose 21% to $5.65b from increases in all product categories led by deposits, cards and bancassurance. Institutional Banking (IBG) income grew 9% to $5.76b from higher cash management income whilst income from Treasury Markets declined 21% to $672m which the bank attributes to unfavourable market conditions.

Expenses rose 13% to $5.80b with ANZ representing five percentage points of the increase.

The bank’s balance sheet also remained healthy as non-performing assets fell 4% to $5.68b in Q4 with the bad loan ratio inching down from 1.6% to 1.5%. The Common Equity Tier-1 ratio increased 0.6 percentage points QoQ to 13.9% due mainly to net profit accretion. 

“The structural improvements we have made to the profitability of our franchise – a shift towards higher-returns businesses, deeper customer relationships and more nimble execution – put us in good stead to navigate the challenges of the coming year,” DBS CEO Piyush Gupta said in a statement.