News Release
DBS FIRST-HALF EARNINGS AT SGD 2.25 BILLION
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Second-quarter earnings at SGD 1.05 billion
SINGAPORE, 8 August 2016 - DBS Group achieved net profit of SGD 2.25 billion for first half 2016. Excluding one-time items a year ago, net profit was slightly higher and a record. Total income increased 6% to a new high of SGD 5.78 billion. This was achieved through diversified growth, with net interest margin at a six-year high and record fee income.The results included a net allowance charge of SGD 150 million for DBS ' exposure to the Swiber group after drawing SGD 250 million from general allowance reserves. Cumulative general allowance reserves continued to be high at SGD 2.95 billion.
Second-quarter net profit was SGD 1.05 billion, which was 6% lower compared to a year ago due to the net allowance charge. Total income rose 8% to a new quarterly high of SGD 2.92 billion as business momentum picked up during the quarter. Loans expanded 4% over the quarter led by corporate loans and market share gains in singapore housing loans. Fee income climbed to a quarterly record. The cost-income ratio improved to 44% as cost growth decelerated. Profit before allowances increased 10% to SGD 1.63 billion.
Total allowances for the half year rose 69% to SGD 536 million. The strong profit before allowances for the quarter and the half year provided a substantial cushion for absorbing the additional net allowances. While the non-performing loan rate rose to 1.1%, allowance coverage continued to be sound at 113% and at 226% if collateral was considered.
Return on equity was 11.0% for the first half. The performance underscored the earnings resilience of the DBS franchise as it continued to capture opportunities across multiple business lines and generate healthy profit even in challenging operating conditions.
Balance sheet remains healthy
Asset quality remained sound. While the non-performing rate rose to 1.1%, allowance coverage was comfortable at 113% and at 226% if collateral was considered.
The average liquidity coverage ratio for the second quarter was 116%, comfortably above the final regulatory requirement of 100% due in 2019. The net stable funding ratio was also above regulatory requirements due in 2018.
Capital was also healthy with the Common Equity Tier-1 ratio at 14.2%. The leverage ratio was at 7.7%, more than twice the minimum of 3% currently envisaged by the Basel Committee.
The Board declared a first-half dividend of 30 cents per share, unchanged from a year ago. The scrip dividend scheme will be applicable to the dividend. Scrip dividends will be issued at the average of the closing prices on each of 15, 16 and 17 August 2016.
DBS CEO Piyush Gupta said, " We achieved two consecutive quarters of record total income despite a challenging operating environment in the first half. The strong income growth in the second quarter enabled profit before allowances to grow 10%. Despite an unexpected significant allowance charge, first-half earnings were at a record.
The performance demonstrates our ability to consistently capture opportunities across our businesses and effectively manage costs. While there remains some uncertainty in the second half, our business momentum is good and our balance sheet healthy. We are well prepared to meet the challenges ahead. "
