DBS Group Holdings Ltd · SGX:D05
DBS — 2Q 2020 Earnings Presentation
28 slides from DBS's earnings presentation, Aug 6, 2020
Slide 1: Strong operating performance enables conservative build-up of allowances
Strong operating performance enables conservative build-up of allowances DBS Group Holdings 2Q 2020 financial results August 6, 2020 Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outsid
Slide 2: Highlights
Highlights First-half profit before allowances up 12% to record $4.71bn, GP of $1.26bn conservatively set aside ▪ Net interest income up 1% as 5% loan growth offset by 16bp decline in net interest margin ▪ Fee income up 1% as a record first quarter was offset by weaker activity in the second quarter
Slide 3: Record 1H operating profit enables conservative GP of $1.26bn
Record 1H operating profit enables conservative GP of $1.26bn (S$m) 1H20 YoY % ▪ Net interest income up 1% as 5% loan growth offsets 16bp decline in NIM to 1.74% Total income record 7,752 7 ▪ Fee income up 1% as 14% increase in 1Q offset Expenses 3,039 (0) by 11% decline in 2Q Profit before allowanc
Slide 4: 1H net interest income up 1% on year as loan and deposit growth offset lower margin
1H net interest income up 1% on year as loan and deposit growth offset by lower net interest margin Net interest margin (%) 2.17 2.12 2.07 Excluding TM 1.90 1.73 1.90 1.88 1.86 Group 1.74 1.62 Net interest 4,739 4,886 4,785 income (S$m) 2,482 2,303 1H19 2H19 1H20 1Q20 2Q20 4
Slide 5: Loans up 3% on half due to non-trade corporate loan growth
Loans up 3% on half due to non-trade corporate loan growth Others In constant-currency terms (S$bn) 381 ▪ Loans up $12bn or 3% in first half CBG / 112 WM ▪ Non-trade corporate loans +20 up $20bn led by Singapore +10 +10 +9 and Hong Kong. Includes +12 $2bn of Singapore +3 government risk-share Other
Slide 6: Deposits up 9% on half from Casa inflows
Deposits up 9% on half from Casa inflows 498 445 461 (S$bn) 50 54 57 Loans 151 162 166 Other funding FD and others Casa 350 358 375 296 230 238 Jun-19 Dec-19 Jun-20 HQLA (S$bn) 92 92 108 Ratios (%) LDR 90 89 84 LCR 137 135 134 NSFR 109 110 121 HQLA is high quality liquid assets; Other funding compri
Slide 7: 1H gross fee income stable on year as record 1Q offset by lower 2Q
1H gross fee income stable on year as record 1Q offset by lower 2Q (S$m) 1,827 1,747 55 1,748 Brokerage 59 135 74 Investment 78 63 962 banking 37 36 Wealth 647 643 786 707 management 37 27 402 Loan-related 206 201 305 226 126 Cards 387 403 100 304 173 131 Transaction 390 services 370 374 188 186 1H1
Slide 8: 1H expenses stable, cost-income ratio at 39%
1H expenses stable, cost-income ratio at 39% 44 Cost / income 42 40 (%) 39 39 3,214 (S$m) 3,044 3,039 1,556 1,483 Staff 1,788 1,726 1,754 expenses 882 872 Other 1,426 1,318 1,285 674 expenses 611 1H19 2H19 1H20 1Q20 2Q20 8
Slide 9: 1H CBG income down 3% on year from lower interest rates and card spending
1H CBG income down 3% on year from lower interest rates and card spending (S$m) 1H20 1H19 YoY % 2H19 HoH % ▪ First-half total income at $3.08bn, Total income 3,080 3,166 (3) 3,133 (2) 3% lower than year ago Retail 1,526 1,611 (5) 1,608 (5) ▪ Higher investment product income Wealth Management 1,554 1
Slide 10: 1H IBG income down 1% on year as lower interest rates offset loan growth
1H IBG income down 1% on year as lower interest rates offset loan growth and higher treasury sales (S$m) 1H20 1H19 YoY % 2H19 HoH % ▪ First-half total income at $3.01bn, Total income 3,009 3,037 (1) 3,036 (1) 1% lower from a year ago Corporate 2,104 1,956 8 1,991 6 ▪ Weaker cash management income SM
Slide 11: 1H TM income increases 44%, customer income up 26%
1H TM income increases 44%, customer income up 26% 1,523 890 (S$m) 1,139 633 387 1,067 809 Customer 644 630 422 503 714 TM 495 437 211 1H19 2H19 1H20 1Q20 2Q20 YoY (%) Customer 1 13 26 35 16 TM 39 38 44 (28) >100 Treasury customer income is included under IBG/CBG segment income. It is included in th
Slide 12: Hong Kong 1H net profit 24% lower after conservative GP
Hong Kong 1H net profit 24% lower after conservative GP (S$m) 1H20 YoY (%) Constant- currency YoY% ▪ Total income declines 9% to $1.38bn from lower interest rates Total income 1,382 (5) (9) ▪ Profit before allowances 11% lower at Expenses 513 (3) (7) $869m Profit before allowances 869 (7) (11) ▪ GP
Slide 13: New NPA formation mostly in 1Q, which included a significant exposure
New NPA formation mostly in 1Q, which included a significant exposure (S$m) 1H19 2H19 1H20 1Q20 2Q20 NPAs at start of period 5,684 5,821 5,773 5,773 6,592 IBG and others 121 (4) 419 620 (201) New NPAs 377 902 1,034 1,023 115 Upgrades, settlements and recoveries (211) (261) (437) (340) (201) Write-of
Slide 14: Increase in 1H SP due to significant exposure
Increase in 1H SP due to significant exposure (S$m) 1H19 2H19 1H20 1Q20 2Q20 IBG and others 229 272 403 257 146 Add charges for 253 331 514 359 165 New NPLs 71 162 389 315 16 Existing NPLs 182 169 125 44 149 Subtract charges for 24 59 111 102 19 Upgrades 0 1 0 0 0 Settlements 15 47 105 100 15 Recove
Slide 15: GP reserves rise 50% on year to $3.80bn
GP reserves rise 50% on year to $3.80bn 6,721 (S$m) Conservative GP reserves 5,819 5,417 ▪ Balance sheet RLAR 461 404 conservatively fortified 3,799 against risks arising from GP 2,525 the Covid-19 pandemic 2,511 ▪ GP reserves raised beyond Tier-2 eligibility by $1bn, providing future store of CET-1
Slide 16: Strong CET-1 and leverage ratios
Strong CET-1 and leverage ratios (%) 16.7 16.6 16.2 Tier 2 1.7 1.7 1.7 0.9 0.9 1.2 Additional Tier 1 Common Equity Tier 1 13.6 14.1 13.7 Jun-19 Dec-19 Jun-20 RWA (S$bn) 302 304 323 Leverage ratio (%) 6.9 7.0 6.8 16
Slide 17: 2Q dividend at 18 cents per share
2Q dividend at 18 cents per share (S¢ per share) 33 Final 60 30 30 18 2Q Interim 60 30 33 1Q 2018 2019 2020 17
Slide 18: In summary – strong operating performance enables conservative GP
In summary – strong operating performance enables conservative GP Strong operating performance amidst severe macroeconomic headwinds in first half reflects resilience of franchise Conservatively raised general allowances by $1.26 billion to $3.80 billion to fortify balance sheet, 24% above MAS minim
Slide 19: Supplementary slides
Supplementary slides DBS Group Holdings 2Q 2020 financial results August 6, 2020 Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. DBS Bank accepts no liability wh
Slide 20: Record 1H profit before allowances
Record 1H profit before allowances (S$m) 1H20 1H19 YoY % 2H19 HoH % Net interest income 4,785 4,739 1 4,886 (2) Fee income 1,513 1,497 1 1,555 (3) Trading income 752 800 (6) 659 14 Other income 702 224 >100 184 >100 Non-interest income 2,967 2,521 18 2,398 24 Total income 7,752 7,260 7 7,284 6 Staff
Slide 21: Hong Kong 1H earnings down 24% on year
Hong Kong 1H earnings down 24% on year Constant-currency terms (S$m) 1H20 1H19 YoY % YoY % 2H19 HoH % HoH % Net interest income 897 994 (10) (13) 1,018 (12) (15) Net fee and commission income 325 323 1 (4) 344 (6) (9) Other non-interest income 160 142 13 8 108 48 45 Total income 1,382 1,459 (5) (9)
Slide 22: NPL stable, allowance coverage above 100%
NPL stable, allowance coverage above 100% 1.5 1.5 1.5 NPL ratio (%) NPA (S$m) 5,821 5,773 6,354 Not overdue 17% 19% 17% Within 90 days overdue 11% 10% 13% More than 90 days overdue 72% 71% 70% Jun-19 Dec-19 Jun-20 SP / loans (bp) 18 21 30 Total allowances as % of: NPA 100 94 106 Unsecured NPA 181 19
Slide 23: Fixed income duration remains well-balanced across the curve
Fixed income duration remains well-balanced across the curve ($m) Jun 20 FVOCI HTC Government securities 17,811 25,655 Less than 3 years 12,525 13,556 3 to 5 years 1,902 4,405 5 to 10 years 2,758 5,770 More than 10 years 626 1,924 Supranational, bank and corporate bonds 18,875 28,186 Total 36,686 53
Slide 24: Deposits up 9% on half and up 13% on year in constant-currency terms
Deposits up 9% on half and up 13% on year in constant- currency terms (S$bn) HoH (%) YoY (%) Jun-20 Reported Underlying Reported Underlying Deposits 447 11 9 14 13 By product Casa 296 24 23 29 28 Fixed deposits and others 151 (9) (11) (6) (9) By currency Singapore dollar 196 21 21 23 23 US dollar 15
Slide 25: Wealth Management segment
Wealth Management segment HoH YoY 1,540 1,555 1,525 1,554 1,330 +2% -0% Income (S$m) 1,054 2017 2018 2019 1H19 2H19 1H20 Half-yearly average (S$bn) AUM 206 220 246 234 246 251 +2% +7% Earning assets 253 270 297 286 297 300 +1% +5% Comprising Treasures, Treasures Private Client and Private Bank 25
Slide 26: SME segment
SME segment 1,081 HoH YoY 1,008 1,064 1,045 Income (S$m) 857 905 -13% -16% 2017 2018 2019 1H19 2H19 1H20 Half-yearly average (S$bn) Loans 37 38 37 37 37 40 +8% +8% Deposits 53 59 61 59 61 64 +5% +9% 26
Slide 27: Global transaction services
Global transaction services 1,314 1,342 1,286 HoH YoY 1,220 1,082 -16% -19% Income (S$m) 927 Cash / SFS Trade 2017 2018 2019 1H19 2H19 1H20 Half-yearly average (S$bn) Trade assets 50 47 50 47 50 48 -5% +1% Deposits 142 142 140 132 140 158 +13% +20% Assets and deposits at end of period 27
Slide 28: Strong operating performance enables conservative build-up of allowances
Strong operating performance enables conservative build-up of allowances DBS Group Holdings 2Q 2020 financial results August 6, 2020 Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outsid