UPDATE: DBS reports 4Q21 net profit rose 37 percent, missing Daiwa forecast

DBS signage at the DBS Marina Regatta dragon boat race on 2 June 2019.DBS signage at the DBS Marina Regatta dragon boat race on 2 June 2019.

This item was originally published on Monday, 14 February 2022 at 8:24 a.m. SGT; it has since been updated with more details.

DBS Group reported Monday its net profit for the fourth quarter grew 37 percent on-year to S$1.39 billion, missing a forecast from Daiwa. 

“The increase was driven by higher business volumes and lower allowances, partially offset by declines in net interest margin and investment gains,” DBS said. 

Total income for the three months ended 31 December edged up 1 percent on-year to S$3.29 billion, Southeast Asia’s largest bank said in a filing to SGX. 

Net interest margin unchanged on-year

Net interest income inched up 1 percent on-year in the quarter to S$2.14 billion, for a net interest margin of 1.43 percent, unchanged from the third quarter, but down from 1.49 percent in the year-ago quarter, DBS reported. 

Loans grew 9 percent on-year in the quarter in constant-currency terms, DBS said.

Daiwa had forecast net profit of S$1.55 billion, with net interest income of S$2.16 billion and a net interest margin of 1.42 percent. Daiwa had forecast total income of S$3.53 billion. Reuters reported a poll of four analysts had forecast S$1.47 billion in net profit for the quarter.

Net fee and commission income rose 9 percent on-year to S$815 million on broad-based growth, led by wealth management and transaction services, DBS said.

Allowances below Daiwa forecast

Other fee and commission income dropped 15 percent on-year to S$338 million on lower trading income and gains from investment securities, the bank said.

Total allowances fell to S$33 million in the quarter, compared with S$577 million in the year-ago quarter on asset quality improvement. Daiwa had forecast total allowances of S$120 million.

For the full year, DBS reported net profit of S$6.80 billion, up 44 percent on-year, a record, with loan growth of 9 percent at a seven-year high. 

2021 earnings hit record

“Strong business momentum mitigated the full-period impact of interest rate cuts in March 2020 and exceptional investment gains the previous year,” DBS said of the full-year outcome.

Non-performing assets fell 13 percent on-year in 2021, with most of the decline in the fourth quarter due to repayments of two significant non-performing loans, the filing said; total allowances tumbled to S$52 million from S$3.07 billion in 2020. 

Full-year net interest income fell 7 percent on-year to S$8.44 billion, hurt by the year-earlier interest rate cuts, but moderated by broad-based loan growth, the bank said. The net interest margin (NIM) fell 17 basis points to 1.45 percent, DBS said.

Piyush Gupta, CEO of DBS, said the results showed a recovering economic environment. 

“I am pleased that we have managed expenses and credit costs well through this period. Equally important, we have made significant investments in our future by expanding our footprint in India, Taiwan and the Greater Bay Area and building new digital platforms to give us additional engines of growth,” Gupta said in the statement.

The bank said it recommended a final dividend of 36 Singapore cents, up from 18 Singapore cents in the year-ago period. That was in addition to its interim dividend of 84 Singapore cents, which was up from 69 Singapore cents in the year-earlier period, the filing said.

Read more details of DBS results.