DBS Group (SGX: D05 / FRA: DEVL / DEV / OTCMKTS: DBSDY / DBSDF): Record Earnings But Profit Margins From Higher Rates Have Peaked

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Singapore headquartered DBS Group (SGX: D05 / FRA: DEVL / DEV / OTCMKTS: DBSDY / DBSDF) operates in the three key Asian axes of growth (Greater China, Southeast Asia and South Asia) and it’s credit ratings are among the highest in the world. The Financial Times recently noted how Singapore’s big banks have been breaking earnings record after record as Hong Kong wanes and money continues to flow to the city-state:

However, the Monetary Authority of Singapore has recently imposed additional capital requirements on DBS after what they call an “unacceptable digital outage.”

OVERVIEW:

  • The bank was set up by the Government of Singapore on 16 July 1968 to take over the industrial financing activities from the Economic Development Board. Today, DBS is a leading financial services group in Asia with a presence in 19 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank’s “AA-” and “Aa1” credit ratings are among the highest in the world.
  • Bank to the Future (Youtube) August 2018
    • As DBS celebrates its 50th anniversary this year, Channel NewsAsia host Yvonne Chan discovers how the bank has evolved over the years.
    • In its formative years as the Development Bank of Singapore, it helped to transform the economic landscape of a young Singapore by helping fledgling industries flourish, and embarked on ambitious projects such as Raffles City. It was also instrumental in leading change in banking, from interest-bearing current accounts to electronic shares application.
  • DBS Group: Driving Transformation in Tech, Culture and Climate (Youtube) Morgan Stanley (October 2022) 13:32 Minutes
    • In the latest episode of Exceptional Leaders / Exceptional Ideas, Nick Lord, Head of ASEAN Research, sits down with Piyush Gupta, Director & CEO of Singapore’s largest bank, DBS Group, to talk about why automation technology is a gamechanger and why he thinks climate transition is a $1 trillion opportunity.
  • The Unstoppable Force: Why DBS Group is a Recession-Proof Investment | Investing Iguana (Youtube) 6:01 Minutes
    • 00:07 – Introduction to DBS Group as a recession-proof investment.
    • 00:28 – Explanation of why DBS Group is a solid blue-chip stock to own even in tough economic times.
    • 01:16 – Singapore’s economic challenges and recession outlook.
    • 02:02 – Weakness in the banking sector of the US and Singapore and its impact on DBS Group.
    • 02:51 – DBS Group’s stock analysis and support levels to watch.
    • 03:53 – DBS Group’s proven track record of stability and growth, and its financial standing.
    • 04:48 – Reasons to invest in DBS Group, including its commitment to innovation and digital transformation in the banking industry.
    • 05:35 – Conclusion and call to action for investors to subscribe to the channel for more investing insights.
  • MAS slaps DBS bank with additional capital requirement following “unacceptable” slew of outages (Marketing Interactive) May 2023
    • Together with the additional capital requirement imposed on DBS in February 2022, this translates to approximately S$1.6 billion in total additional regulatory capital, said MAS in a statement. 
    • “The additional capital requirement on DBS Bank is now a multiplier of 1.8 times to its risk weighted assets for operational risk, an increase from the multiplier of 1.5 times that MAS applied in February 2022 following the November 2021 disruption,” it said. 
  • DBS Hit by More Capital Minimums (Youtube) May 2023 2:10 Minutes
    • The Monetary Authority of Singapore has imposed additional capital requirements on DBS after what they call an “unacceptable digital outage.” Customers on Friday had trouble accessing the bank’s apps and websites as well as some ATM services. Bloomberg Intelligence’s Rena Kwok discusses the requirements on Bloomberg Television.
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CEO presentation
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  • DBS posts record $2.57 billion Q1 profit, says net interest margins have peaked (The Straits Times) May 2023
    • DBS Group Holdings on Tuesday reported record quarterly earnings driven by higher interest rates, but flagged that profit margins from the high rates have peaked. Still, business momentum is expected to remain healthy, with “some pockets of moderation”, chief executive Piyush Gupta said at a briefing on the bank’s results.
    • But he [chief executive Piyush Gupta] said that with the April 27 hike in residential property stamp duties, DBS might not be able to close in on its target of growing housing loans by around $2 billion in 2023.
    • There has also been a slowdown in margin loans, as investors would rather put their own money to work instead of borrowing from the bank amid high interest rates, he said.
    • Wealth management fees, the largest component of fee income, plunged 11 per cent due to a high base in January 2022. This was before the Ukraine war and interest rate hikes to dampen high inflation took a toll on wealth management activity, noted chief financial officer Chng Sok Hui.
  • DBS, OCBC and UOB All Reported Record Earnings: Which Bank Qualifies as the Best Pick? (The Smart Investor) May 2023
    • We size up the trio of local banks after their recent earnings period to tease out which qualifies as the best investment.
    • NOTE: They discuss 6 criteria in detail. OCBC was on top for the following three:
World’s Safest Banks 2022

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Disclaimer. The information and views contained on this website and newsletter is provided for informational purposes only and does not constitute investment advice and/or a recommendation. Your use of any content is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the content. Seek a duly licensed professional for any investment advice. I may have positions in the investments covered. This is not a recommendation to buy or sell any investment mentioned.

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