Dbs Group Hldgs Ltd Ord

Good morning, everyone, and welcome to DBS's third quarter financial results briefing. On today's call, our CEO, Piyush Gupta, Deputy CEO, Tan Tzu-Shan, and CFO, Chung Seok-Hui. As per our norm, Piyush and Seok-Hui will start by sharing more about our third quarter, and both will be speaking to presentation slides, which we will also share on WebEx. And thereafter, we will take media questions. So without further ado, Sophi, please. Thanks, Agnes.

Good morning, everyone. We delivered a record performance for the third quarter with profit surpassing $3 billion for the first time. Net profit increased 15% from a year ago to $3.03 billion. as total income rose 11% to $5.75 billion. The growth was broad-based. Commercial book net interest income rose from balance sheet growth and a stable net interest margin. Net fee income increased to a new high, led by wealth management, while treasury customer sales also grew. Markets trading income rose to the highest level in 10 quarters. Expenses increased 10%. with City Taiwan accounting for 3 percentage points of the increase. The cost-to-income ratio was 39%. For the first 9 months, net profit rose 11% to a record $8.79 billion, with ROE at 18.8%. Total income rose 11% to a new high of $16.8 billion from growth in both the commercial book and markets trading. The broad-based increase in the commercial book was from higher net interest margin, balance sheet growth, as well as record fee income and treasury customer sales. Asset quality was resilient. Non-performing assets declined 8% from the previous quarter as repayments, upgrades and write-offs more than offset new MPA formation. The MPL ratio fell from 1.1% to 1.0%. Specific allowances remained below the cycle average at 14 basis points of loans for the third quarter and 11 basis points for the nine months. Capital was healthy. Based on the final Basel III reforms, the transitional CET1 ratio was 17.2%, with a fully phased-in ratio at 15.2%. the board announced a new $3 billion share buyback program. The program is underpinned by a strong capital position and is another affirmation of our commitment to capital management. The third quarter dividend was maintained at $0.54 per share. Next. Today we announced the establishment of a new $3 billion share buyback programme. Under the programme, shares will be purchased in the open market and cancelled for the first time. The buybacks will be carried out at management's discretion and subject to market conditions. These purchases will be over and above the periodic buybacks we already carried out for employee share plans. The program will reduce our fully phased-in CET1 ratio by around 0.8 percentage points when completed. At the same time, it will provide a permanent lift to earnings per share in addition to raising returns on equity. The programme is the latest in a series of capital management initiatives undertaken by the board, which included a doubling of the ordinary dividend over the last five years, occasional special dividends and the recent bonus issue that effectively raised dividends. Our dividend policy remains unchanged. We'll continue paying ordinary dividends that are sustainable and rise progressively with earnings. Dividends continue to be the primary means of returning capital to shareholders. Since 2019, we have doubled ordinary dividends to an annualised $6 billion, reflecting the significant structural improvements our franchise has achieved. The current dividend of $0.54 per quarter represents an annualised dividend yield of 5.5% based on yesterday's closing price. The buyback program is another affirmation of our commitment to capital management. It is underpinned by our strong capital position and ongoing capital generation. Third quarter compared to third quarter last year. Compared to a year ago, net profit rose 15% and crossed $3 billion for the first time. Commercial book total income increased 8% or $396 million to $5.42 billion. The growth was broad-based. Net interest income rose 3% or $112 million to $3.80 billion, driven by balance sheet growth and a stable net interest margin of 2.83%. Net fee income rose 32% or $266 million to a record $1.11 billion, led by wealth management, which grew 55%. Commercial book other non-interest income was 4% or $18 million higher at $515 million, with the increase driven by wealth management treasury customer sales. markets trading income doubled to $331 billion, the highest in 10 quarters, as FX interest rate and equity derivative activities benefited from market volatility. Expenses rose 10% or $211 million to $2.25 billion, with City Taiwan accounting for 3 percentage points of the increase. Profit before allowances grew 11%, to 3.50 billion. Specific allowances were 77 million lower at 120 million or 14 basis points of loans. General allowances of 10 million were taken. Third quarter compared to second quarter. Compared to the second quarter, net profit grew 8% as total income rose 5%. Commercial book total income increased 2%. Net interest income was 1% or $27 million higher as net interest margin was stable. Fee income grew 6% or $61 million largely due to wealth management fees. Commercial book or the non-interest income increased 8% or $39 million contributed by higher treasury customer saves. Markets trading income rose 77% or $144 million. Expenses increased 4% or $77 million from higher staff and computerization costs. Profit before allowances grew 6%. Total allowances were 12% or $18 million lower. 9 months performance. For the 9 months, net profit rose 11% to a new high of $8.79 billion. with ROE at 18.8%. Commercial book total income grew 10%. Net interest income increased 5% of $563 million to $11.2 billion from a four basis point expansion in net interest margin to 2.81% as well as balance sheet growth. Peer income rose 27% or $683 million to a record $3.20 billion led by higher wealth management, card and loan related fees. Commercial book other non-interest income was 16% or $221 million higher with increase led by record treasury customer sales. Markets trading income grew 25% or $152 million to $764 million, with all of the increase occurring in the third quarter. Expenses rose 11% or $649 million to $6.50 billion, with City Taiwan accounting for 4 percentage points of the increase. The cost-to-income ratio was stable at 39%. Profit before allowances was 10% higher at $10.3 billion. Specific allowances remained low at $330 million and were stable compared to a year ago at 11 basis points. General allowances of $83 million were taken. Commercial book net interest income. Compared to the previous quarter, commercial book net interest income increased 1% to $3.80 billion. net interest margin was stable at 2.83%, helped by the repricing of fixed-rate assets. Compared to a year ago, commercial book net interest income rose 3%, driven by balance sheet growth. Combining the commercial book and markets trading, the group's net interest income was little changed from the previous quarter at $3.60 billion, while net interest margin declined three basis points to 2.11%. The lower net interest margin was due to market trading's deployment into products with inherent accounting asymmetry. Compared to a year ago, group net interest income rose 3%, driven by balance sheet growth. For the nine months, commercial book net interest income increased 5% from a four basis point expansion in net interest margin and balance sheet growth. Group net interest income was also 5% higher. Loans. During the quarter, gross loans rose $3 billion or 1% in constant currency terms to $424 billion. led by a $2 billion increase in trade loans. Non-trade corporate loans and consumer loans were also slightly higher. Over the nine months, loans grew $8 billion, or 2%, led by trade loans and non-trade corporate loans. Deposits. During the quarter, total deposits grew $10 billion, or 2%, in constant currency terms, to $545 billion, from foreign currency CASA inflows, some of which were transitory. Sing dollar-CASA movements stabilised during the quarter, and over the nine months, in contrast to a $19 billion outflow in the previous year. For the nine months, total deposits rose 19 billion, or 4%, with all of the increase due to fixed deposits. Liquidity was ample. with LCR of 144% and net stable funding ratio at 115%, well above regulatory requirements. Fee income. Third quarter gross fee income rose 4% from the previous quarter to a record $1.32 billion, driven by wealth management. Wealth management fees rose 18% to $609 million from broad-based growth in investment products and bank assurance, underpinned by strong investor sentiment. Investment banking fees were also higher, rising 63%, to $31 million from increased debt capital market income. Transaction service fees were stable at $227 million, while card fees and loan-related fees were lower than their previous quarter records at $302 million and $146 million, respectively. Compared to a year ago, third-quarter gross fee income increased 25%, led by a 55% increase in wealth management. Card fees, investment banking fees, and loan-related fees also contributed to the growth. Excluding city Taiwan, gross fee income rose 20%, led by a 46% increase in wealth management. For the nine months, gross fee income grew 26% to 3.85 billion, driven by increases in wealth management cards and loan-related fees. Excluding city Taiwan, gross fee income rose 18%. Commercial book non-interest income. For the third quarter, commercial book non-interest income, which is boxed up in red on this chart, rose 21% from a year ago and 7% from the previous quarter to $1.63 billion, benefiting from strong wealth management momentum. Fee income was at a record while Treasury customer sales were higher than both comparative periods. For the 9 months, commercial book non-interest income rose 23% from a year ago to $4.82 billion. The growth was led by record fee income and Treasury customer sales. Combining commercial book and markets trading, total non-interest income For the third quarter grew 28% from a year ago and 14% from the previous quarter to 2.16 billion. For the nine months, it was 23% higher than a year ago at 6.10 billion. Wealth management. The strong wealth management performance was a highlight this quarter. Over the previous few quarters, Wealth management segment income had been growing at a rate of around 20% year-on-year, driven by accelerating growth in non-interest income, which rose to 52% this quarter. The momentum was sustained by record fees from investment products and bank assurance, as well as higher wealth management treasury customer sales. Assets under management reached a new high of $401 billion. growing 15% in constant currency terms, with net new money inflows from high net worth individuals of $6 billion during the quarter. The strong investor sentiment contributed to fuel the conversion of deposits to investments, and the proportion of assets under management in investments reached 56%, cost-to-income ratio. Third quarter expenses were 4% higher at $2.25 billion than the previous quarter from higher staff and computerization costs. Compared to the previous year, expenses grew 10%, with City Taiwan accounting for 3 percentage points of the increase. For the 9 months, expenses rose 11% to $6.50 billion, with City Taiwan accounting for 4 percentage points of the increase. Both the third quarter and nine-month cost-to-income ratios were stable at 39%. Non-performing assets. Non-performing assets declined 8%, or $397 million from the previous quarter to $4.68 billion, contributed by the repayment of a few new MPAs recognised in the first quarter. Higher repayments, upgrades, and write-offs more than offset new MPA formation, which included two lumpy cases. The NPR ratio fell from 1.1% to 1.0%. Specific allowances. Third quarter specific allowances amounted to 120 million or 14 basis points of loans. Allowances for new MPLs were mostly offset by write-backs for supplements and recoveries, reflecting the MPA movements in the previous slide. For the nine months, specific allowances remained low at 332 million or 11 basis points of loans. Allowance coverage. Total allowance coverage stood at $6.32 billion with $2.37 billion in specific allowance reserves and 3.96 billion in general allowance reserves. GP overlays were little changed at 2.3 billion. Allowance coverage stood at 135% and at 242% after considering collateral. Capital ratios. Final Basel III reforms took effect in Singapore on 1 July 2024. Under transitional arrangements, our CET1 ratio was 17.2%. The transitional rules benefited from our CET1 ratio by two percentage points, primarily due to lower corporate LGD, loss given default, removal of the IRB scaler, and a reduction in operational risk RWA. The pro forma CET1 ratio on a fully phased-in basis was 15.2%. There was an increase from the previous quarter due to profit accretion and heavy OCI gains. As mentioned in my earlier slide, the share buyback program we announced this morning will reduce our fully phased-in CET1 by 0.8 percentage points. In other words, upon completion of the buyback programme, fully paid CET1 will be reduced from 15.2% to 14.4%, which is above our management operating range. Dividends. The Board declared a quarterly dividend of 54 cents per share for the third quarter, bringing the dividend for the nine months to 1.62 per share. In summary, we achieved another record performance in the third quarter and nine months. Commercial book net interest margin was supported by the reduced interest rate sensitivity of our balance sheet, while wealth management drove fee income to a new high. The new buyback program we announced today is underpinned by a strong capital position and ongoing earnings generation. It is another affirmation of our commitment to capital management. With our reduced sensitivity to interest rates, our high general allowance reserves and our strong capital position, we remain well positioned to continue delivering healthy shareholder returns. I will now pass you to our CEO, Pish.

All right. Thank you, Sokwi. And again, welcome everybody to the media conference. I will need two slides, and as usual, slide one, I will reflect on a few of the comments that Sakweez just made. Slide two, maybe a little bit of thinking on 2025. On slide one, I start first with net interest income. Net interest income for the quarter was stable, reflecting balance sheet growth, even though total NIM is down a little bit. Actually, the underlying commercial book NIM quarter on quarter has been flat, 2.83. This, therefore, does not reflect the drop in interest rates, the interest rate cuts. In truth, the commercial book NIM will slowly start reducing. But on the other hand, the NIM drag in the Treasury portfolio, the GFM portfolio, uh will reverse as well the new group name and the quarter was actually just because of that the market uh trading deployment and products uh where there is accounting asymmetry we make money on the non-interest income line and uh the funding cost goes in the interest line uh and therefore that results in anomaly in the total name the total name for um the quarter therefore came off by three basis points Interesting to point out, though, that the exit NIM in September was around 2.15. So we saw a pop-up. October NIM is also around those levels. And that reflects the fact that the accounting anomalies in the later part of the quarter and starting this year are reducing as the market interest rates are coming down. So I think the key point to reflect is that the thing to focus on is the commercial book NIM. There is some noise in the total name, and you should take that into account. The second point, fee income. Sokhi pointed out the record fee income. The underlying big news is obviously wealth management. This continues to be very, very strong. The flows have been very diversified. They are not just North Asia, they continue to reflect Southeast Asia, Middle East, Europe. And the clients continue to also put more money to work and therefore the percentage of investments of total AUM is up to 56% for the quarter. Clients are also doing activities which give us better yield. So that's quite helpful for the fee income category. Trading was a Fantastic quarter. If you remember a few years ago, our guidance on trading was 250 to 270 million bucks a quarter. And then with the rising interest rates in the last couple of years, we've guided it down to as low as 225 million bucks in the quarter. But this quarter was 330 and that's very strong. It's the highest we've had. in 10 quarters. We benefited across every asset class. So equity derivatives, interest rate, FX, there's a lot of movement and we benefited from all of that. So strong trading number. Cost-income ratio is stable at 39%. Our nine-month expense growth is 11%. If you X out the city, Taiwan is about 7%. We earlier guided for fully expense growth in the 9% to 10% range. I think we will still hit the 9% to 10% range because fourth quarter last year was particularly high. So we're on track with both focused on expense growth as well as cost income ratio. Asset quality continue to be resilient. NPR ratios come down to 1%. I want to point out two things. One, obviously, we saw an increase in new NPA formation. As Sokwi said, there were two lumpy cases. Both were in China. One reflected auto sector client where there was some misstatement of audited financials. So idiosyncratic. We've pretty much written that one off. The other reflected prudential moving of a particular case into NPL. It hasn't defaulted. We just think that there might be stresses and repayment coming in the next couple of quarters. So we've been very prudential about recognizing it. But the loan-to-value is low, so we didn't have to take any provisions around it. At the same time, I want to point out that we are seeing very strong recoveries, repayments, recoveries, some write-offs. And they're coming in three different categories in this quarter. The first reflect recoveries from the oil and gas provisions that we made some years ago. Substantial amount of recoveries from that, and that reflects that we were very prudent in the NPLs we took and the SPs we took in that portfolio. The second is recovery is related to the money laundering case in Singapore. Again, as I indicated last quarter, we've been able to sell most of the properties that we finance. So the recovery is coming in from that, again, reflecting the fact that we were prudent. And the third actually most interesting, we took a couple of property cases into NPL in Hong Kong, China in the beginning of the year. We have been able to actually monetize, sell those assets or refinance those assets. And so I've been able to reverse the NPL within the year. Again, reflecting the fact that our loan to values are generally quite low and so We've been able to actually recover even where we do have to move things into NPL. So overall, actually quite happy with the asset quality that we are 1% overall NPL ratio is a good place to be. And finally, the last comment in the share buyback program. We haven't got a specific time frame. It might take a couple of years to execute it because we're going to be quite thoughtful and make sure that we use the right opportunities in which to execute the program. I'm sure there's some questions on whether, given the stock price is so high, whether it's a good time to do share buybacks. In reality, if you want to actually buy back and cancel shares, and if you have a strong belief in the fundamentals of the business, any time is a good time. I'm struck by the fact that Companies like JP Morgan and Apple continue to do share buyback, even at a relatively high price to book. Nevertheless, we will, of course, be thoughtful and prudent about when is the right time at which to actually exercise this buyback. The important thing, though, is that it reflects our continued commitment to capital management. We recognize that we do have, continue to still have a lot of capital, and therefore we need to continue to use every opportunity and tool that we have to be able to return capital back to shareholders. It's like, Quick comment on looking into 25. We think notwithstanding the interest rate reduction, we should be able to hold net interest income at around 2024 levels. By the way, the slides were made before yesterday's election results and before the market pricing on interest rate cuts changed. So our assumptions are based on a total of two percentage point reduction by the end of next year. We assume 1%. This year, the 50 basis points that have already been done, we assumed another couple of cuts this year and then four more cuts next year. The market is now obviously pricing in less cards, and so that might have some bearing on our assessment for next year. Interest income might be slightly better than we think, but Even with the interest rate cuts or 2% rate cuts, we think that we might be able to hold net interest income. Group NIM will probably tend down a bit, a couple of basis points. Like I said, commercial book NIM will be down, but we will recover it from the trading market side where we will benefit from lower funding costs. The non-interest income we expect to be high single digit growth again powered by wealth management as well as treasury customer sales. Both those business continue to be quite robust. So if you add those two together we think total income will be up in the low single digits and that's actually a good outcome even after losing five six hundred million dollars on interest rate deduction. Our cost income ratio we expect to be the low 40s range. We think cost growth might be mid single digits, but low 40s cost income ratio is still very efficient. On SPs, we are still modeling our long-term through-cycle assumption of 17 to 20 basis points, even though we're still not seeing any meaningful signs of stress in the portfolio. There's small increases in delinquencies in consumer and SME, like I talked about. Many of them are actually already beginning to stabilize, so we don't see that to be a big concern. But we have been prudent when targeting 17 to 20 basis points. And as Sokhi pointed out, we do have well over $2 billion in GP overlays. So we do have the potential for GP write-backs if the SP environment turns out to be worse. So when you put all of that together, we think next year's pre-tax profits will be around this year's level. There could be some upside to this based on a couple of factors. One, if rates don't come off as much as we forecasted, that would be an upside. And second, we are already beginning to see some of the two positive factors. One, the CASA outflow the last couple of years has stabilized, and we're beginning to see some reversal of the outgoing CASA, especially from the outflows to T-bills and so on. So if we wind up getting substantially more CASA back, it obviously helps our NII. So that could be a further upside. And finally, on the fixed asset repricing, we have about $55 billion of fixed asset repricing next year. Already the way the yield curves are moving in the last 24, 48 hours, we might be able to actually replace that at better conditions than we originally assumed. So when I say the pre-tax profit should be around this year's level, there might be a little bit offside in that number. The net profit, though, after that is likely to be slightly lower. And that's because of the implementation of the global minimum tax of 15%. I think the impact of that to DBS is about $400 million. And so if we factor that in, we might see a little bit of a drag on the bottom line. I'm going to stop there, Edna, and throw it open for questions.

Thank you, Piyush. We will now take questions from the media. So if you would like to ask a question, then please click on the raise hand button in WebEx so we know that you have something you would like to ask us. And then when we call on you, please accept the invitation to unmute yourself. Before you ask your question, do please identify yourself as well as the media outlet that you represent. I see a question from Lula.

So, Gula, please unmute yourself. I've unmuted. Can I be heard? Yes, you can be heard. Oh, great. Okay, thanks. Okay, congratulations for this excellent set of results. I have a few questions. Tell me how many I can ask, Edna. Shall we start with two? Okay, two. I'll start with the two main ones.

Well, I choose the two best ones.

Oh, my goodness. Okay, let me start with the interest rate one, because you know, we saw that the yields have just shot through the roof. So I don't know how this changes your NIM sensitivity and what you're expecting for the next year? Because if the Fed stops raising or starts to raise interest rates, how will it also affect your customers? Because your loan growth hasn't been very minimal. I mean, in constant currency terms, you had some loan growth, but but not in Sing dollars. So that's the first question. And the second one is, of course, for shareholders about your dividend payouts and the rationale for the share buybacks, given that you could have given the 3 billion as a special dividend because your dividend payout per quarter is about 1.5 billion. So you could have got more than a dollar in special dividends. Yeah, those are the two most important questions. And then, well, there's some others about how your MEV model changes, should there be this trade war, and if China loses its MFN, its most favored nation status. So that one is, you know, those are the main questions.

On interest rate, you threw in a lot of things in the question. And that's the right way to think, because it is quite complicated. So the first obvious one, if there are fewer rate cuts, the general view is it could be that the Trump regime is more inflationary between immigration policies, more tariffs, and so on, and more deficit spending. If that is the case, then it is possible that Fed monetary policy might stay tighter than is currently being projected. And obviously, if rates stay higher, then that helps our name and our net interest margin. That's what I just pointed out at the end of my last slide. There might be some upside coming from that. On the... is also reflected in the fact that as we replace our fixed asset book, our current assumption was that next year we'll only get very minimal benefit from fixed asset repricing. We'll still get some benefit, but the new fixed assets we'll put on will replace assets which are already relatively well-priced. However, the way the yield curves are, we might get better fixed asset repricing. So that would help our overall interest income. On the other hand, what could happen is that it could have an impact on overall global growth that's possible. We have not forecasted very strong loan growth for next year in any way. We've forecasted sort of mid-single digit, 4-5% loan growth. So, yeah, if rates stay high and the tariffs and so on, it's possible that the balance sheet and loan growth might be a tad bit less. In general, though... sensitivity shows that we benefit more from the interest rate than we give up on the balance sheet. And when you put all of that together, I think higher interest rate environment is generally better for BBS. As regards the special dividend versus buyback, in fact, we have choices. And as you go forward, we still have a lot of capital to return. We, you know, Just based even on the final number, we have anything from $3 to $5 billion of more capital to return even after this. And if you look at the transition capital, there might be a little bit more. And so we're going to have to use all three engines, which is step up in dividends, you know, special dividends, as well as buybacks to the extent that we can. And therefore, it is not a question of, you know, why do you not do one over the other? We're just trying to use every tool. You remember last quarter, a couple of quarters ago, we even used the bonus issue to be able to return some dividend back to shareholders. Your third question, which I will take, it's very hard to tell what happens in terms of, you know, what tariff size. You know, Trump has said 10 or 20% tariffs across the board, 60% on China. I kind of find it hard to believe that he will actually follow through on that policy. So I think the better thing to do is to wait and see what policy they actually come up with. It's very hard to make projections at this point in time.

Okay, thanks. Thanks. I had one question for Sushant, but I think it, I'm not quite sure whether it's still relevant. It's because you said that next year's net profit could be lower than this year's. And so would that affect your 54 cents dividends per share per quarter? And I wondered what Sushant's view was likely to be if, you know, the first time she comes in the dividends per quarter falls?

Okay, sneaking in a fourth question.

I'm happy to take that Gula. I think given what we've explained about our strong capital positions, and also if we do have some tailwinds because of rates going up, Then I think we will continue the path of, you know, as you earn more, you pay more. I think the philosophy is the more we make, the more we can pay our shareholders. And I think we'll stick to that philosophy and stick to the toolkit that we have, which is, you know, pay more dividends as we make more. potentially step up or share buyback. So I think our toolkit has been expanded on how we return shareholder capital. We have to be active in our capital management. We also have to be fairly on the ball on where we see rates going. I mean, the truth is with the Trump regime, we probably see more volatility in interest rates, more volatility in effects. That creates both opportunities and potentially challenges. But as Piyush rightly said, if rates do go up, yeah, we will see potentially loan growth maybe a bit muted, but we will have the tailwinds of rates and rising interest income. Having said that, I think this year, whilst loan growth was muted, actually new loan growth was actually quite strong. Where we did see quite a lot was we saw a lot of loan repayments. Yeah. Okay.

Thanks. Thank you. Let everyone else take Ask questions.

Thanks. You shall add something. So, Kula, to your question, our payout ratio is currently 50%. So, even with some slight decline in MPAM because of the introduction of the new tax regime, we are okay to continue with the step-up.

So just because the income will be down next year, it's not underlying income, it's the tax impact, and we have enough capital, so it will mean a little bit higher payout ratio, but the intent is to continue doing the step-up next year, notwithstanding potentially a small drop in income because of tax.

Okay, I see a question from Chanya. So Chanya, please accept the invitation to unmute yourself. Go ahead. Chania, go ahead with your question. We can't hear you. Chania, you are unmuted, so you can go ahead with your question. Okay, I think we will come back to you later. There is a question from Felicia. from VH.

Hi, can everyone hear me? Yes, we can hear you. Okay, great. So I have, I think, three and a half questions. The first one is Hong Kong. What is DBS's outlook for Hong Kong? And what are your credit costs like for the Hong Kong franchise? Are they stable? The second one is, can you give us an idea of your funding costs during the quarter? And what were the transitory foreign currency costs about? And the last one, it's also related to the second one, is the market's trading income a one-off or is it from customer flows? Thank you.

So, Hong Kong, obviously, the situation continues to be slow. I mean, the market continues to be slow. The impact of the China economy in Hong Kong is still coming through. Even though they've announced improvement in some policy measures in the back of the China mainland, they also relaxed some measures in the property sector and so on. But our business environment has been slow this year. It's reflecting among everything else in our loan growth. The biggest area we're seeing loan growth challenges is in Hong Kong. Maybe Sushant can talk about that a little bit. Nevertheless, our credit performance and credit portfolio has continued to be very resilient. As we've been pointing out every quarter, we think we were ahead in the game. We ring-fenced all our issues, so we're not seeing stress on that front. You want to add a little bit?

So I think we've been very nuanced and conservative in Hong Kong. We've actually decreased our SME loan book in the last few years. And we've also been conservative in the real estate side. Hong Kong's total real estate book has been going down and it's now about $29 billion. And most of that is really exposure to the large players, the large blue chip players. And where we have seen strong growth in Hong Kong is in the wealth management. I think both the Stock Connect, the Bond Connect and opportunities for wealth management has been very strong. So that's helped with the slowdown in the corporate side.

On your second question on credit, yeah, credit will be stable. We're not seeing any signs of stress. Like I said, in the last quarter, delinquency was picking up a bit in the SME book, which is not very big, and in the unsecured consumer book. We've tightened up on unsecured consumer. So by and large, the delinquencies in this quarter have stabilized. They're still inching up a tad bit in India, but it's a small portfolio. And we're not seeing any sectoral problems anywhere. We've already flagged and talked about our real estate and commercial real estate, and we still remain fairly confident about the quality of our book and the securities that we have. on transit the cassette happens all the time you know the large corporates government entities etc bring in money uh in this quarter there was some money that came in from sale of assets and ipo proceeds which happened to be there over quarter and and disappeared after that so i would just look through it uh the key story on the casa to take away though that after two years of casa outflow repricing We forecasted about $140 billion of CASA would reprice or flow out. And we're pretty much on track. That's what happened. But this year, the overall CASA thing has stabilized. In fact, last quarter, money started coming in. And that included retail. That included outflows into T-bills and SSBs and so on. And so that has stemmed and turned around. So that obviously has a positive implication for CASA and our net interest income going forward. Finally, on markets, look, some of it is obviously our customer flows because we keep pointing out our customer treasury income is growing in a very secular way. It's partly through digitization, partly through distribution and expanding our customer footprint. So, if we show the slide now, which takes our fee income and our customer non-interest income together to demonstrate that a lot of it is coming from wealth and from other customer flows. So, that's obviously very helpful. Nevertheless, when you have a bumper quarter like this one, some of it is obviously due to catching the market moves appropriately. And in this quarter, there was volatility on rates, equities, and FX, and we were able to position and catch most of that. And going concern basis, I still like to think of $250 to $70 million, maybe $250 in this environment, as being the business as usual number we should be looking at in a quarter.

Got it. Thank you.

We'll go back to Chania. Chania, please accept the invite to unmute yourself. We can hear you, Chania.

Yes, okay. Can you hear me now? Yes, we can. Okay, great. Thank you. Could you just talk a little bit more about China? You mentioned that it might be too soon to expect negative impacts from Trump win. But I mean, can you just say a little bit more in terms of colors? Second question is about the excess capital that you estimate to be in terms of about three to five billion. Can we still see acquisitions on the card? Thank you.

So Chania, I'm going to ask Sushant to talk a little bit about China because the bulk of the business in China is her business.

Hi Chania, Sushant here. I'll take your first question if I may. So in China, as you know, we have been de-risking for the last few years. We've reduced our real estate exposure there. But where we have found good growth opportunities is helping Chinese enterprise go out. So the China outbound traffic, the China outbound trade, and the China interest in investing in Southeast Asia, potentially going to other parts of the world, going upstream, downstream in places like Indonesia, Vietnam, etc., has been growing. So that's really been our value proposition. So we've de-risked the real estate exposure since a few years back. And we've increased our coverage of Chinese enterprises, including SOEs, including some of the bigger POEs in tech, in data centers, in metals and mining, and in the upstream sort of EV construct.

So I would add to that, Chana. Therefore, we think the overall business environment in the country is not being great in any event. The outbound environment, I think, is going to hold up. So the Trump administration, the main thing we need to watch out for is legal regulatory risk. You know, they could come up with different kinds of sanctions and other policies. You've got to be on top of that. Your second... Oh, on the M&A, whether we have the possibility of an M&A. Look, our M&A policy is unchanged. That in the countries that matter to us, you know, India, Indonesia, China, Taiwan, you know, maybe Malaysia, the new regime is more forthcoming. You know, these four, five countries, if something comes up, which is additive to what we need to do, you know, bolt-on kind of acquisitions, we will look at those. Anything in the specific lines of business we're interested, we will look at those. But we're quite principled. You know, acquisition must, you know, make economic sense. So, valuation matters a lot to us. And we've got to have the bandwidth to be able to integrate it and bring some value to it. And so if something comes up which is consistent with those philosophies, then yes, we would look at that. But, you know, at the same time, the idea is not to, at this point, our base case is that we still need to return a lot of the capital. It's unlikely that we're going to use a lot of it to do M&A.

There's a question from Roy. Thank you. Outro. Ultra, please unmute yourself and go ahead. Ultra, do you have a question? If you do, then we have unmuted you. Please go ahead. Okay, looks like maybe not. We'll just do a last call for questions in case anyone else has something they want to ask. Once again, if you do, please tap on the raise hand button. And then we will call you. Just give a few moments for you to do that. Okay, Gula has another question. So we will circle back to Gula.

Hi, hi, yes, yes. Just one more question. You know, there's been this rise in sort of private credit, etc. Is there any risk that in the next, what, well, maybe four or five years, that there will be no, I mean, the intermediary functions of banks could sort of decline?

Gulad, the The total private credit market in the US is growing. It's about $2 trillion. But in Asia, it's less than $100 billion. It's not that huge. But of course, there's always a risk that you squeeze everything out of the regulated banking sector and move it all to the non-regulated or private credit sector. But, you know, I've been in this industry 40 years. 40 years ago, everybody said the big risk is that everybody will go to the capital markets and, you know, so there won't be any role for banks. 40 years later, people still use banks as an intermediary. And so, while there could be some greater participation of private credit, I think in the foreseeable future, to assume that that might mean the demise of the formal banking sector might be a bit of a stretch.

Okay. Okay.

Thanks. Thanks. Thanks. Thank you. There's a question from Anshuman from Reuters. Anshuman, please go ahead and unmute yourself.

So I think the unmute function is not straightforward. A lot of people are struggling with unmuting.

Yeah, it appears so. Okay, there's a question from Straits.

Hi, can you hear me?

Yes, Anshuman, we can.

Yeah, thanks. Thanks for this. Piyush, just checking on the wealth management side, I mean, it seems to be more of the same in terms of the key drivers of the business. Can you sort of give some color on if anything's changed now and what's driving the momentum in the business and looking ahead? I mean, you sort of in the last few quarters have said the flows are quite diversified, but is there anything else that is really showing up the business? Thanks.

Well, it's actually more of the same. Flows are diversified. People assume it's a lot of only, you know, China money. It's not true. It's very broad. And our platform and this country is to benefit from flows from Southeast Asia as well, South Asia as well. The big shift I told you last quarter is going to be the case that people are willing to take more risk. So when money first moved in, it was in deposits. And then over the last couple of quarters, every quarter, people are shifting more out of deposits into invested AUM. This quarter, again, it went up by another percentage point. And so when that happens, that obviously helps our fee income. The other thing that's happening is people are moving their choice of asset class. So in the beginning, a year ago, a lot of people were just buying treasuries, US govies, treasuries, etc. In the last couple of quarters, people have been putting money in more structured products with equity underlying. And again, as people move to slightly more riskier underlying assets, that improves our yield in the portfolio. So that's what's happening. But yeah, if you look at the big picture, it's really more of the same.

Okay, is there any final question? I think we have time for the last question, if anyone has one. Once again, please tap on the raise hand button if you do. There's a question from Nailun.

Hi, can you hear me? Yes, we can, Nylon. Hi, so I just want to check a bit on the mortgage rates because it seems like the foreign banks in Singapore have cut their foreign rates, mortgage rates to be below the local banks. So is there any attempt by DBS to do so or is there a reason why these foreign banks have lower rates than that of the local banks?

Yeah, we actually already mentioned the last time that We think some of the market pricing is not entirely sensible. If you compare the funding costs, today fixed deposits are higher than mortgage pricing and that's kind of illogical. you know, we're not leading the price down on mortgages. We're doing tactically from time to time to hold market position, but certainly not leading the price down. With the new outlook after the Trump elections yesterday, it would be interesting to see, you know, what the competitive response is given rates are suddenly, and GDs are moving up.

Thank you.

Okay, is there another question? Okay, if not, then I think we will draw this time to close. Thank you everyone for joining today's media briefing.