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Yahoo
2 days ago
- Business
- Yahoo
DBS 2QFY2025 net profit rises 1% y-o-y to $2.82 billion
The board has declared an ordinary dividend of 60 cents per share and a capital return dividend of 15 cents per share for the second quarter. DBS Group Holdings' net profit for 2QFY2025 ended June 30 rose 1% y-o-y to $2.82 billion, 1% above consensus. Net profit for 1HFY2025 was slightly lower y-o-y at $5.72 billion compared to $5.76 billion this time last year. 2QFY2025 total income rose 5% y-o-y to $5.73 billion. Net interest income was 2% higher y-o-y at $3.65 billion, while group net interest margin (NIM) fell 7 basis points (bps) q-o-q and 9 bps y-o-y to 2.05% in 2QFY2025. Commercial book net interest income (NII) fell 4% y-o-y to $3.63 billion in 2QFY2025 due to a 28 bps decline in NIM to 2.55% from US Federal Reserve rate cuts and lower Singapore Overnight Rate Average (Sora) and Hong Kong Interbank Offered Rate (Hibor). For 2QFY2025, non-interest income grew 10% y-o-y to $2.08 billion, driven by higher fee income, treasury customer sales and markets trading gain. Fee income and treasury customer sales rose to their second-highest quarterly levels. Commercial book net fee income rose 11% y-o-y to $1.17 billion. The increase was largely due to wealth management fees, which rose 25% y-o-y to $649 million from broad-based growth in investment products and bancassurance. Investment banking fees were also higher from increased debt and equity capital market activity. Commercial book other non-interest income increased 9% y-o-y to $522 million. Excluding non-recurring items a year ago, it rose 18% y-o-y driven by strong treasury customer sales to both wealth management and corporate customers. Markets trading income more than doubled y-o-y to $418 million from higher contributions across a range of activities, benefitting from lower funding costs and a more conducive trading environment. Expenses increased 5% y-o-y to $2.27 billion led by higher staff costs. The cost-income ratio was stable at 40%. Loans rose 4% y-o-y in constant-currency terms to $433 billion, led by non-trade corporate loans from broad-based growth across industries. Deposits increased 7% y-o-y in constant-currency terms to $574 billion, with the current account and savings account (Casa) ratio improving to 52%. Surplus deposits were deployed into liquid assets, says DBS on Aug 7. 'This was accretive to net interest income and return on equity but modestly reduced net interest margin.' For 1HFY2025, total income rose 5% y-o-y to a new high of $11.6 billion. Return on equity was 17.0%, while return on tangible equity was 18.8%. DBS says asset quality continued to be resilient, with the non-performing loan (NPL) ratio improving from 1.1% this time last year to 1.0%. Specific allowances were at 15 bps of loans for 2QFY2025 and 12 bps of loans for 1HFY2025. As at June 30, total non-performing assets fell 8% from a year ago to $4.69 billion. Over the first six months, loans grew 3% y-o-y and deposits increased 5% y-o-y in constant-currency terms. 1HFY2025 commercial book net fee income rose 17% y-o-y to a record $2.44 billion, led by a 30% increase in wealth management fees to $1.37 billion. Loan-related fees rose 11% to a record $412 million. Investment banking and transaction service fees were also higher, says DBS. Commercial book other non-interest income declined 3% y-o-y to $1.07 billion. Excluding non-recurring items in 1HFY2024, it grew 11% from record treasury customer sales. Markets trading income increased 80% y-o-y in 1HFY2025 to $781 million, reflecting lower funding costs and a more conducive trading environment. For the first half, consumer banking and wealth management income rose 4% y-o-y to $5.28 billion, underpinned by higher net new money inflows and stronger investment product and bancassurance sales. The gains were partially offset by the impact of lower interest rates on deposit income. Institutional banking income fell 4% y-o-y to $4.51 billion as a decline in cash management income due to lower interest rates more than offset higher income from treasury product sales. Markets trading delivered its strongest performance in four years during 1HFY2025, with income rising to $781 million. Specific allowances were $150 million or 15 bps of loans for 2QFY2025, bringing the 1HFY2025 total to $270 million, or 12 bps. Allowance coverage stood at 137% and at 236% after considering collateral. Liquidity continued to be ample, says the bank, with the liquidity coverage ratio of 147% and the net stable funding ratio of 114% both well above regulatory requirements of 100%. The reported Common Equity Tier-1 (CET-1) ratio was 17.0% based on transitional arrangements, while the pro-forma ratio on a fully phased-in basis was 15.1%. The leverage ratio of 6.5% was more than twice the regulatory minimum of 3%. The board has declared an ordinary dividend of 60 cents per share and a capital return dividend of 15 cents per share for the second quarter, bringing the 1HFY2025 amounts to $1.20 per share and 30 cents per share respectively. The ordinary dividend is up from $1.08 per share this time last year. DBS CEO Tan Su Shan says: 'We delivered a strong set of results for the first half despite the challenging environment. Our ability to manage the balance sheet nimbly, grow deposits and capture market opportunities helped offset the external pressures. Net interest income, fee income and treasury customer sales reached record levels, while markets trading performance was the strongest in four years. Return on equity was 17% even after the impact of the global minimum tax, reflecting the benefit of our investments to deepen customer relationships across wealth management and corporate banking.' She adds: 'While external uncertainties remain, we have opportunities ahead of us. 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.' DBS will hold a results briefing later today. DBS shares closed 61 cents higher, or 1.26% up, at $48.85 on Aug 6, up 11.12% year to date. 5 mil for digital inclusivity, AI literacy under renewed partnership with IMDA Over 2,000 Frasers Property tenants to enjoy preferential rates from DBS under new MOU Read more stories about where the money flows, and analysis of the biggest market stories from Singapore and around the World Get in-depth insights from our expert contributors, and dive into financial and economic trends Follow the market issue situation with our daily updates Or want more Lifestyle and Passion stories? Click hereError in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Times
3 days ago
- Business
- Business Times
DBS looks to volume growth to mitigate falling interest rates; stock soars to record high, hits S$50 mark
[SINGAPORE] Shares of DBS soared to a record high on Thursday (Aug 7) – briefly hitting a milestone S$50 mark – as South-east Asia's biggest lender beat expectations for its second-quarter results amid challenging times ahead for the banks. The counter eased to close at S$49.75, up 1.8 per cent for the day, after some 6.5 million shares changed hands. Shares of DBS have climbed 13.8 per cent in the year to date. In the quarters ahead, the bank expects falling interest rates to put a dent in its net interest margin (NIM). But chief executive Tan Su Shan believes deposits volume growth will continue to support net interest income for 2025. Speaking at the lender's second-quarter results briefing on Thursday, Tan flagged changes in interest rates and foreign exchange (forex) as the biggest risks to performance; she said, however, that this could be mitigated by volume growth. 'Don't focus on NIMs, because the NIM will go down with the markets, but the net interest income can go up with volumes, and that's how you mitigate that, and also how you hedge your net interest income risk nimbly.' Tan expects the bank's ability to manage balance sheets, grow deposits and capture market share will help tide it through uncertainty and hit its 2025 target of having group net interest income slightly above 2024 levels. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Meanwhile, DBS continues to boost structural growth in wealth management, global transaction services, digitalisation, financial institutions. Q2 earnings beat expectations DBS on Thursday posted a year-on-year rise of 1 per cent in net profit to S$2.82 billion for Q2, beating the S$2.79 billion consensus forecast in a Bloomberg survey of six analysts. Commercial book net interest income fell 4 per cent to S$3.63 billion; NIM fell 28 basis points (bps) year on year to 2.55 per cent due to US Federal Reserve rate cuts, as well as lower Singapore Overnight Rate Average (Sora) and Hong Kong Interbank Offered Rate (Hibor). This was mitigated by balance sheet hedging and partly offset by strong deposit growth. Tan said that because forex rates drive interest rate volatility, there is a need for the bank to be nimble with interest rate swaps and forex hedging. Deposits in Q2 rose 7 per cent on year in constant-currency terms to S$574 billion, from increases in both fixed deposits and current and savings accounts. Having seen sustained momentum in July, Tan expects deposits growth will continue for the rest of the year. The growth in deposits exceeded loan growth, and the surplus was deployed into liquid assets, which was accretive to net interest income and return on equity, though it modestly reduced NIM. Return on equity for Q2 stood at 16.7 per cent, down from 18.2 per cent a year earlier. Meanwhile, Q2 loans rose 4 per cent in constant-currency terms to S$433 billion, led by non-trade corporate loans from broad-based growth across industries. Tan said the lender has seen structural growth in its loans; it has been increasing market share by deepening its industry expertise, and winning lead manager roles. She still sees opportunities for strong growth in non-trade corporate loans in segments including tech, as well as in logistics and transportation. Commercial book net fee and commission income was up 11 per cent at S$1.17 billion, largely due to higher wealth management fees, while investment banking fees were higher from increased debt and equity capital market activity. Tan said the lender's fee income was 'quite pleasing', given that growth was across the board in wealth fees, loan fees and treasury sales fees. Commercial book other non-interest income increased 9 per cent to S$522 million, driven by strong treasury customer sales to wealth management and corporate customers. Markets trading income, meanwhile, more than doubled to S$418 million from higher contributions across a range of activities, benefiting from lower funding costs and a more conducive trading environment. The bank's non-performing loans ratio fell to 1 per cent, from 1.1 per cent the same period a year earlier, as new non-performing asset formation stayed low and was more than offset by higher repayments and write-offs. DBS declared an ordinary dividend of S$0.60 per share and a capital return dividend of S$0.15 per share for the period. This brings the quarter's total dividend payout to S$0.75 per share, compared with the S$0.54 in the year-ago period. DBS kept its 2025 guidance. It expects commercial book non-interest income growth to be mid- to high-single digits, supported by a double-digit growth in wealth management; cost-income ratio to be in the low-40 per cent range; and specific provisions will normalise to 17 to 20 bps in the second half. Overall, it is guiding for net profit to be below 2024 levels mainly due to global minimum tax of 15 per cent.
Business Times
01-08-2025
- Business
- Business Times
OCBC trims full-year NIM guidance; Q2 profit slips 7% to S$1.82 billion
[SINGAPORE] OCBC has lowered its target net interest margin (NIM) for FY2025 to a range of 1.9 to 1.95 per cent, down five to 10 basis points (bps) from an earlier range of around 2 per cent. During the second quarter, 'reduction in loan yields outpaced the drop in deposit costs', said OCBC group chief financial officer Goh Chin Yee on Friday (Aug 1). She was speaking at the bank's Q2 results briefing for the three months ended Jun 30, for which OCBC – the first of Singapore's three local lenders to report earnings – posted a 7 per cent year-on-year decline in net profit to S$1.82 billion. The drop was largely due to a 6 per cent fall in net interest income to S$2.28 billion, as NIM fell 28 bps to 1.92 per cent from 2.2 per cent a year ago. On a quarter-on-quarter basis, NIM fell 12 bps. Most of this decline was attributed to a 'sharp drop' in the Singapore Overnight Rate Average (Sora) and the Hong Kong Interbank Offered Rate (Hibor) over the quarter. The one-month and three-month compounded Sora declined by 63 bps and 49 bps, respectively, while one-month and three-month Hibor fell more steeply by 289 bps and 215 bps. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up About half of OCBC's loan book is denominated in Singapore and Hong Kong dollars. Around 80 per cent of its Singapore dollar loans and nearly all Hong Kong dollar loans are on floating rates. As a result, the reduction in loan yields more than offset the drop in deposit costs, Goh noted. In March, the lender announced a cut in the maximum interest rate for its flagship 360 Account to 6.3 per cent per annum on the first S$100,000, from 7.65 per cent. A further cut to 5.45 per cent took effect from Friday. Looking ahead, Goh expects both Sora and Hibor to 'stay steady' at current levels, with OCBC maintaining its assumption that the US Federal Reserve will cut rates three times for the rest of the year. If those assumptions hold, the bank's NIM is likely to come in 'closer to the higher end' of its revised guidance range, she added. OCBC posted an exit NIM of 1.88 per cent in June, and expects an 'upward inflection' in the coming months as the deposit rate cuts flow through. Dividend and capital return The bank's Q2 net profit of S$1.82 billion beat the S$1.79 billion consensus forecast in a Bloomberg poll of six analysts. OCBC declared an interim dividend of S$0.41 per share, down from S$0.44 a year ago. This was in line with its 50 per cent interim payout policy, said group chief executive officer Helen Wong. The bank 'remains committed' to its 60 per cent total dividend payout target for FY2025, along with its S$2.5 billion two-year share buyback plan, she added. Other full-year guidance also remained unchanged, including mid-single-digit loan growth and a cost-to-income ratio in the mid-40s. Other business drivers Non-interest income rose 5 per cent to S$1.26 billion, supported by a 24 per cent increase in fee income and a 6 per cent rise in trading income. These gains offset lower insurance income. OCBC's non-performing loan ratio held steady at 0.9 per cent. Total allowances fell to S$114 million in the quarter, down from S$144 million a year ago. For the first half of the year, the bank posted a 6 per cent decline in net profit to S$3.7 billion. Total income slipped 1 per cent to S$7.2 billion, from S$7.26 billion a year ago. Shares of OCBC were down 0.4 per cent or S$0.07 at S$16.80 as at 2 pm on Friday, following the results announcement.
Business Times
28-07-2025
- Business
- Business Times
DBS, OCBC, UOB Q2 results likely to be weighed down by lower interest rates
[SINGAPORE] The trio of local banks will likely post weaker results for the second quarter of 2025, weighed down by lower net interest income from falling interest rates, analysts said. They are expected to post their Q2 financials next month, beginning with OCBC on Aug 1 and followed by DBS and UOB on Aug 7. Net interest margins (NIMs) will probably be 'materially lower' in Q2, said Thilan Wickramasinghe, head of research and regional financials at Maybank Securities Singapore. He noted that the Singapore Overnight Rate Average (Sora) was down 50 basis points – due to 'massive' domestic liquidity, partly because of safe haven inflows – while the Hong Kong Interbank Offered Rate (Hibor) was at its lowest since 2022. The Sora decline provided only partial relief in funding costs, as banks 'weigh off preserving market share', he said. DBS Group Research analyst Lim Rui Wen also expects NIMs to fall quarter on quarter by a high single digit, due to the lower Sora and Hibor. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The rates' impact will likely be more pronounced as more loans get repriced against reduced benchmark rates throughout Q2, she added. However, she noted that OCBC's and UOB's repricing of their fixed-deposit and flagship deposit account interest rates should buffer falling asset yields in subsequent quarters. Wickramasinghe also pointed out that loan growth was better than expected in Q2, probably due to front-loading demand ahead of the expiry of US President Donald Trump's tariff moratorium. While this may partially offset downsides in net interest income, it is unlikely to arrest sequential decline, the researcher said. Trump impact Analysts also said that Trump's 'Liberation Day' tariffs in April likely weighed on market sentiment, impacting wealth management fees in turn. Tay Wee Kuang, an analyst at CGS International, said that macroeconomic uncertainty could continue to dampen fee income in the second half of the year, despite equity market sentiment having slowly recovered. Nevertheless, Lim of DBS expects wealth management income to remain a tailwind for Singapore banks in the medium term, as wealth management activity began recovering in May. This is also supported by ongoing growth in assets under management (AUM), she said. 'The investible portion of AUM is expected, as clients reallocated funds from fixed-deposit rates and (treasury-bill) rates, which continue to see declining rates through Q2.' Wickramasinghe likewise expects sequential improvements in wealth management fees, given falling domestic benchmark rates and risk-on market conditions. He added that significant volatility around foreign exchange, trade and interest rates would likely have supported trading income in Q2, which could surprise on the upside, especially for DBS and UOB. Higher credit costs Meanwhile, the three banks' credit costs could trend towards the higher end of their respective 2025 guidance, due to weakness across Asean economies such as Thailand and Indonesia , said Tay. 'However, we do not expect total credit costs to change drastically quarter on quarter, as we believe the pre-emptive general provisions recognised by the Singapore banks in Q1 should remain sufficient amid the current credit cycle,' he added. Ongoing reviews of second-order impacts from the US tariffs may also lead the banks to maintain or increase their general provision buffers, said Lim. Therefore, general provisions write-backs are unlikely this year, she noted. CGS International and Maybank Securities kept their 'neutral' call on the Singapore banking sector, with Tay noting that the lenders lack growth catalysts in an uncertain economic outlook. The analysts expect UOB to restore its guidance for 2025, which it had suspended in Q1. They are also awaiting more clarity from OCBC on its strategy, following its failed bid to privatise its insurance arm, Great Eastern . Clarity around returns may also take longer to resolve due to the lender's 'unexpected leadership change ', Wickramasinghe said. But Lim, who has 'hold' calls on OCBC and UOB, expects the banks' dividend yields of up to 6.5 per cent to continue supporting share prices. 'As asset quality remains largely benign, and dividend yields stay attractive, comparable to Singapore real estate investment trusts, we expect share prices to remain well-supported in a low interest-rate environment and due to the safe haven appeal of the Singapore dollar,' she said.
Glasgow Times
23-07-2025
- Business
- Glasgow Times
Judicial system needs ‘shake-up' after trader convictions, says Sir David Davis
Tom Hayes and Carlo Palombo were found guilty over benchmark interest rate rigging in 2015 and 2019 respectively, but had their convictions quashed at the Supreme Court on Wednesday. The former UBS trader and the ex-vice president of euro rates at Barclays bank were said to have manipulated the London Inter-Bank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor). Speaking at a press conference following the Supreme Court judgment, Sir David described the two men as 'scapegoats for the sins that led to the financial crisis'. Former traders Carlo Palombo and Tom Hayes had their convictions quashed by five Supreme Court justices (Jordan Pettitt/PA) He said: 'The implications are far-reaching and of course have been devastating for those caught up in it. 'There were several other people convicted of rate rigging, dozens of others who were either prosecuted, acquitted or not prosecuted. Their lives were upended too. 'This scapegoating exercise happened as a result of collusion between the banks and government agencies, including the SFO (Serious Fraud Office) and FCA (Financial Conduct Authority) and we're not done with that. 'This scandal also highlights the need for urgent reform within our justice system on a range of issues – the handling of expert witnesses right through to the rigidity of the appeals system.' In an 82-page judgment, with which Supreme Court president Lord Reed, Lords Hodge and Lloyd-Jones and Lady Simler agreed, Lord Leggatt said judges' misdirection to the juries had led to the men's wrongful convictions. He said: 'The history of these two cases raises concerns about the effectiveness of the criminal appeal system in England and Wales in confronting legal error.' Sir David said the Supreme Court justices 'did not unpack' why the appeal system fell into error in these cases. He said: 'I think the judicial system needs a shake-up, and this is the latest demonstrator of it, and we will be returning to it in the future.' Mr Hayes said he believes the trials of the two men became caught up in the politics of the financial crisis, adding that there was a 'big desire from institutions and politicians, acting in their own interest largely', for traders to go to prison. Asked about his thoughts on what role juries play in cases like his and Mr Palombo's, he said it was a 'dangerous idea' for complicated fraud and financial cases to be heard only by a judge. The former trader added: 'The jury is the last defensive barrier that every citizen in this country has between them and a wrongful conviction. 'And are juries perfect? No, they're not. Do they make mistakes? Yes, they do. And you know, it's the best of a whole load of options, none of which is perfect.' Ben Rose, part of Mr Palombo's legal team, said Wednesday's Supreme Court judgment is 'likely to offer a route' by which others who have been convicted in similar circumstances 'can right the wrong that has been done to them'. He also said there was a 'fundamental error' in the way the case was prosecuted and that the role of the jury was 'overridden and usurped' by the judges. The lawyer added: 'That should not happen in a country that abides by the rule of law.'
