DBS profit up 54% to record S$3.71b in H1, 33 cents DPS announced

Fee income rose to a record as wealth fees hit new heights.

DBS Group’s net profit reached S$3.71b (US$2.75b) for the first half (H1) of 2021, 54% higher compared to H1 2020, the banks' latest results showed. 

Following the lifting of regulatory restrictions on dividends imposed a year ago, DBS has also declared an interim one-tier tax dividend of 33 cents for each DBSH ordinary share for the second quarter (Q2) of 2021, payable on 26 August. The estimated dividends payable is S$847m (about US$628m).

The stronger profit was thanks to strong growth in business volumes and lower allowances, which more than offset declines in interest rates and in investment gains from a high base, DBS said.

On the other hand, net interest income was 12% lower than a year ago at S$4.2b, as a decline in net interest margin more than offset loan and deposit growth. Net interest margin fell 27 basis points to 1.47%, with most of the decline occurring in the two quarters after global interest rate cuts in March 2020. 

For Q2, the net profit was S$1.70b, a 37% increase from Q2 2020. 

Business momentum reportedly accelerated in the first six months of the year, with loans rising by 7% or S$26b in constant-currency terms to a total of $397b. 

All notable loan sectors registered growth, led by non-trade corporate loans, which were S$7b higher on the back of drawdowns in Singapore and Greater China. Trade loans also increased by S$6b. 

Housing loans rose S$2b in H1 of the year as bookings continued to be strong. Wealth management loans were also reportedly higher thanks to buoyant investor sentiment, DBS said.

Deposits grew to S$483b during the same period, a 9% or S$40b increase from a year ago. About S$14b of this growth was in the first quarter.

In particular, current and savings accounts rose S$73b from a year ago and S$26b over H1, enabling more expensive fixed deposits to be reduced, DBS said. 

Fee income also rose to a new record of S$1.82b, a 20% jump from last year. Wealth management fees jumped 27% to hit a new record of S$945m as investment product sales were boosted by an improving economic outlook in a low-interest rate environment.

Consumer spending recovery and strong growth from online transactions pushed card fees to rise by 10% and reach S$334m.

Investment banking fees increased 81% to S$114m, driven by a recovery in equity transactions and record fixed-income fees. Loan-related fees also rose 2% to S$230m.

The bank’s expenses increased by 3% to S$3.13b compared to last year. Excluding Lakshmi Vilas Bank, underlying expenses were stable, DBS assured, with higher staff costs in line with an improved business environment offset by lower occupancy and computerisation costs. The cost-income ratio was 42%.

Commenting on DBS’ latest results, Eugene Tarzimanov, vice president - senior credit officer at Moody’s said that they expect DBS to maintain its very strong credit metrics in 2021 to 2022.

(S$1 = US$0.74)