- DBS (SGX:D05) reported net profit of S$2,629m for 2Q23, up 45% y-o-y and 2% q-o-q. The results are above our net profit forecast of S$2,466m. The results included one-time integration cost of S$60m for Citigroup's consumer banking business in Taiwan.
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- Benefitting from higher interest rates. NIM expanded by 58bp y-o-y and 4bp q-o-q to 2.16% in 2Q23 as the Fed raised the Fed funds rate by 25bp in May and HIBOR rebounded in Hong Kong. Net interest income grew 40% y-o-y.
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- Wealth management gaining momentum. Fees & commissions grew 7% y-o-y, the first y-o-y increase in six quarters. The recovery was led by wealth management (+12% y-o-y) and cards (+17% y-o-y). Sentiment has improved and high network clients have started to put their money to work, especially towards the later part of the quarter. DBS attracted net new money of S$6b and assets under management (AUM) grew 9% y-o-y to S$294b
- Other non-interest income remained strong despite remaining flat q-o-q at S$641m in 2Q23. Treasury customer sales grew 13% y-o-y to S$458m.
- Improving cost efficiency. DBS's operating expenses increased 16% y-o-y. Cost-to-income ratio improved 6ppt y-o-y to 38% in 2Q23.
- Asset quality is stable. NPL formation was benign and NPL balance dropped 3% q-o-q in 2Q23. NPL ratio was stable 1.1%. Specific provisions of S$114m were 10bp of loans. DBS wrote-back general provisions of S$42m due to transfers and credit upgrade.
- Scaling greater heights. DBS's total income crossed the S$5b mark for the first time in 1H23. ROE reached a new quarterly record of 19.2% in 2Q23.
DBS manangement's guidance for 2023
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