DBS Group achieves a record performance in 2023 as net profit rises by 26% y-o-y to SGD10.3bn ($7.7bn). Return on equity climbs from 15.0% to a new high of 18.0%. Total income rises by 22%, exceeding SGD 20bn for the first time. This is driven by a higher net interest margin, a rebound in fee income and record treasury customer sales. Asset quality is resilient with specific allowances remaining low at 11 basis points of loans.
For the fourth quarter, net profit is up by 2% from a year ago to SGD2.39bn.
Dividends and bonus issue
The Board proposes a final dividend of SGD0.54 per share for the fourth quarter, an increase of SGD0.06 from the previous payout. This brings the ordinary dividend for the financial full year to SGD1.92 per share, an increase of SGD0.42 from the previous year.
In addition, the Board proposes a bonus issue on the basis of one bonus share for every existing 10 ordinary shares held. Barring unforeseen circumstances, the annualised ordinary dividend going forward will be SGD2.16 per share. This represents a 24% increase from the SGD 1.92 per share for financial year 2023. Based on the closing share price on 6 February 2024, the post-bonus annualised dividend yield will be 7.5%.
DBS cuts CEO’s pay following digital outage
DBS reports that the variable compensation for the CEO and other members of the Group Management Committee should be cut. Specifically, it is being held accountable for the series of digital disruptions during the year. Their 2023 variable compensation was collectively reduced by 21% from the previous year despite record 2023 profits. The CEO took a cut of 30%, which amounted to SGD4.14m.
DBS has committed SGD80m to implementing its technology uplift and resilience roadmap. It says these efforts will enable the bank to better pre-empt disruptions to its services. And provide customers with alternate channels for payments and account enquiries during disruptions, and shorten incident recovery time.
DBS full year performance
Commercial book net interest income rises 33% to a record SGD14.3bn. The net interest margin is up by 65 basis points to 2.76% from higher interest rates. The improvement in net interest margin results from the repricing of assets with higher interest rates. Although deposit costs also increased, the pace was slower compared to asset yields.
Loans rise by 1% or SGD 6bn in constant-currency terms to SGD 416bn.
Deposits rise by 3% to SGD535bn. Card fees are up by 22% to a record SGD1.04bn from higher spending as well as the integration of Citi Taiwan. Wealth management fees increased 13% to SGD1.51bn. This reflects strong net new money inflows, a shift from deposits into investments and bancassurance, and contribution from Citi Taiwan. Fee income from other activities rise by 4%.
Expenses rise by 14% to SGD8.06bn. This reflects an increase in staff costs from salary increments and a higher headcount.
DBS wealth management income hits record high
Full-year consumer banking/wealth management income rises by 35% to SGD 8.96bn. The rise reflects higher interest rates and growth in wealth management product sales and card fees. Wealth Management income increased to a record. Assets under management are up by 23% to a new high of SGD365bn. This is underpinned by strong net new money inflows and the consolidation of Citi Taiwan.
DBS CEO Piyush Gupta said, “We achieved an outstanding financial performance in 2023. A return on equity of 18.0% is significantly above previous years. The franchise and digital transformations carried out over the past decade have reaped substantial benefits in a higher interest rate environment. The stronger profitability has enabled us to step up capital returns to shareholders through a bonus issue as well as make an inaugural contribution of SGD 100 million towards a 10-year community support initiative. Interest rates are expected to soften and geopolitical tensions persist. But our franchise strengths will put us in good stead to sustain our performance in the coming year.”
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