Dbs Group Hldgs Ltd S/Adr

Good morning and a very warm welcome to DBS's first quarter 2021 financial results briefing. This morning we announced that our first quarter 2021 net profit doubled from the previous quarter and rose 72% from a year ago to $2.01 billion. This marks the first time that quarterly earnings have crossed the $2 billion mark. So some housekeeping before we begin. There will be two sets of slides accompanying the briefing today. both the CFO and CEO presentation can be assessed from the DGS Investor Relations page. To take us through the numbers, we have with us our CEO, Piyush Gupta, and our CFO, Cheung Sok Hwee. I'll hand the time now to Sok Hwee.

Thank you. Good morning, everyone. We start with slide two. We delivered a record performance as quarterly net profit crossed $2 billion for the first time in our history. doubling from the quarter before and increasing 72% from a year ago. Business momentum was strong and broad-based. Zones grew 3% from the previous quarter, boosting net interest income 2% on a day-adjusted basis. Net interest margin was stable. Key income rose 15% from a year ago to a record, with wealth management fees and transaction service fees at new highs. Treasury markets and treasury customer income were also at record levels. The broad-based business momentum mitigated the impact of lower interest rates. Expenses rose 2% from a year ago to $1.59 billion due to the inclusion of Lakshmi Villas Bank. Asset quality was healthy, with non-performing asset formation and specific allowances at pre-pandemic levels. The stabilizing asset quality resulted in a general allowance right back of $119 million. Non-performing assets were 2% lower than the previous quarter. The MPL rate was 1.5% and specific provisions were 21 basis points of loans. General Allowance Reserve remained prudent at $4.13 billion. There was a $1 billion or 31% above NES minimum requirements and $1.3 billion above the amount eligible for consideration as tier 2 capital. Total allowance coverage was 109% or 203% after taking collateral into account. Liquidity remained amper as deposit rose 2% due to current and savings account inflows. This was similar to recent quarters with CASA rising into account for 74% of deposits. The liquidity coverage ratio and net stable funding ratio were 136% and 127% respectively. Capital was healthy with the CET1 ratio at 14.3%, well above the group's target operating range. The leverage ratio of 6.7% was more than twice the regulatory requirement of 3%. The board declared a first-quarter dividend of $0.18 a share in line with NES's guidance for banks to moderate dividends. Slide 3. Next profit rose 72% from a year ago to $2.01 billion, the first time in our history quarterly earnings crossed the $2 billion mark. Total income was 4% lower at $3.8 A strong business momentum was more than offset by the impact of lower interest rates. Had net interest margin been stable, total income would have risen 9%. Net interest income fell 15%, or $375 million, to $2.11 billion. The decline was due to a 37 basis point fall in net interest margin to 1.49% from global interest rate cuts in the first quarter of last year. Fees rose 15%, or $121 million, to a new high of $953 million. Record fees from wealth management and transaction services, as well as higher investment banking fees, more than offset declines in loan-related fees and cut fees. Other income increased 12%, or $82 million to $794 million. Trading income doubled as treasury market non-interest income and treasury customer income rose to new highs. Investment gains fell from a high base. Expenses were 2% or $31 million higher at $1.59 billion due to the integration of Lakshmini Billions Bank. Stabilizing asset quality resulted in a general allowance write-back of $119 million compared to the $703 million that was set aside a year ago. Specific provisions were $183 million lower at $200 million, like for Net interest income was $2.11 billion, 2% higher than the previous quarter after adjusting for the shorter day count. The increase was due to constant currency loan growth of 3%. Net interest margin was unchanged at 1.49% after three successive quarters of decline as loan repricing slowed. Compared to a year ago, net interest income fell 15%. the impact of our 37 basis points decline in net interest margins due to global interest rate cuts was moderated by loan growth of 7%. We have guided for 2021 full-year net interest margin to be between 1.45% and 1.50%. Slide 5. Growth loans increased 3% or $12 billion over the quarter to $393 billion. growth accelerated and broadened compared to previous quarters. Non-trade corporate loans rose 2%, similar to the quarterly run rate in 2020. The growth was based across the region and across a range of industries. Trade loans grew 6% as market demand improved and commodity prices rose. This reversed the decline in most quarters of 2020. Housing loans were 1% higher as strong momentum continued. This was the second successive quarter of growth following declines in second and third quarter of 2020. The growth was the result of strong bookings in the second half of last year which continued into the current quarter. Wealth management loans were also higher from healthy investor risk appetite and strong market sentiment. Compared to a year ago, loans grew 7% led by non-trade corporate loans. Slide 6. Deposits increased to $478 billion over the quarter, up 2% in constant currency terms. As in recent quarters, the growth was due to current and savings accounts, which enabled higher-cost fixed deposits to be let go. CAFA grew 4% of $14 billion to comprise 74% of customer deposits, a 1% point improvement from the previous quarter and a 16% point improvement from a year ago. Six deposits fell 3% of $4 billion, continuing the previous quarter's decline trend. Faster loan growth than deposit growth resulted in the loan-deposit ratio rising 1% to 81% after two successive quarters of this month. Liquidity was amped with a liquidity coverage ratio at 136% and a net stable funding ratio at 127%. Slide 7. From this quarter, gross fees, which is a small component of total fees income, has been reclassified into transaction services and wealth management to better reflect the business operating model. Gross fees rose 13%. from the previous record a year ago to a new high of $1.09 billion. Record wealth management and transaction service fees as well as higher investment banking fees more than offset declines in card fees and loan-related fees. Wealth management fees rose 24% to a record $519 million. Strong investor sentiment amidst the low interest rate environment drove Iman across a wide range of investment products. Bank assurances were also higher, reversing declines throughout 2020. A further $168 million of wealth management income is captured under trading income as these are structured in-house. Transaction surrogate fees increased 10% to a new high of $230 million as trade finance, cash management, and institutional brokerage fees grew. Investment banking fees increased 36% to $49 million from higher equity and fixed income capital market activity. Cut fees were only 2% lower at $169 million as consumer spending continued to recover towards pre-pandemic levels and digital transactions accelerated. These partly made up for troubles spending, which remains low. Growth fees increased 25% from the previous quarter. The growth was also broad-based, with cut fees the exception due to seasonal factors. Slide 8. Expenses. Expenses were stable from the previous quarter and 2% higher than a year ago at $1.59 billion due to the integration with Lakshmi Villas Bank. Excluding LV Bank, Costs were stable. As higher bonus accruals in line with better financial performance were offset by lower non-staff costs. Expenses were unchanged from the previous quarter. The cost-to-income ratio was 41%. Slide 9. Asset quality was healthy as delinquencies for both corporate and consumer segments continued to be low despite the tapering of loan moratoriums. New non-performing asset formation was at half the quarterly average for 2020 and in line with pre-pandemic levels. NPL formation was more than offset by write-offs and recoveries. As a result, non-performing assets declined 2% from the previous quarter to $6.59 billion. The NPL rate was 1.5%, slightly lower than the previous quarter. Slide 10. The stabilizing asset quality resulted in lower specific provisions. Specific allowances for credit exposures fell to 199 million or 31 basis points of loan, compared with 31 basis points for full year 2020 and in line with pre-pandemic levels. Slide 11. General allowances reserved. declined 4% from the previous quarter due to write-back, resulting from improvements in portfolio quality. General allowance reserves remained prudent at $4.13 billion, which were $1 billion or 31% above NEA's minimum requirements. They also exceeded the amount eligible for tier 2 capital by $1.3 billion, which acts as a buffer for the total capital adequacy ratio. Allowance coverage was at 109%. When collateral was considered, allowance coverage was at 203%. Slide 12. Capital continued to be healthy. The common to equity share-one ratio rose 0.4 percentage points from the previous quarter to 14.3%. Profit accretion and a methodology refinement for market-rated assets were partially offset by increase in credit risk-rated assets. The CT1 ratio was above the group's target operating range of between 12% and 13.5%. The leverage ratio of 6.7% was more than twice the regulatory minimum, regulatory requirement of 3%. Slide 13. The Board declared a dividend of 18 cents per share for the first quarter. This was in line with MAS guidance for local banks to moderate dividends for four quarters starting from the second quarter of 2020. The script dividend scheme will be applicable to the first quarter dividends. Script dividends will be issued at the average of the closing prices of the 10th and 11th of May 2021. Based on yesterday's closing share price and assuming that dividends are held at 18 cents per quarter, The annualized dividend yield is 2.4%. Slide 14. In summary, the first quarter was extraordinary, with all businesses recording strong growth. Loan growth accelerated. CASA growth was sustained, while fee income and treasury income both reached new highs. We remained disciplined on costs, which were stable from a year ago, excluding luxury villas banks. Asset quality stabilized, resulting in a general allowance right back. The global economic rebound is strengthening and we are bullish about prospects for the coming year. Our franchise has been enhanced by new growth platforms. This quarter, we announced takes in Shenzhen Rural Commercial Bank and Incasio to develop blockchain-based cross-border clearing and settlement technology. These follow the amalgamation of Lakshmi Village Bank, our announcement of the China Fraternity's joint venture and the launch of the digital exchange announced in the last quarter. We are well-placed to continue supporting customers and delivering shareholder returns as the economic recovery takes hold. Thank you for your attention and I will now pass you to Dish.

Thanks, Sakshi. So let me get to my presentation. As Jim said, you can find it also on our website. And if we start off with page 2, I am not going to go through all of this talk, we just said it. But array sheet was a bit of a golden quarter for us. And just a couple of snippets. The known growth was really broad based. The non-corporate and the corporate lending has been consistent now for a couple of quarters. That was good. But for the first time in several quarters, trade kicked in. And that's partly reflecting the improved commodity prices, but partly overall imports and exports in our client base at least was strong. That was helpful. Housing growth continued to be strong. Bookings for the first quarter were also strong, almost at a record level. So I see that continue to be an area of good momentum. And wealth management and lending also continue to grow quite nicely, accompanying all of the activity in the market. So, broad-based loan growth. The other thing that's all out is the activity in investment banking. Last year, DCM, fixed income, was generally consistently strong, but ECM was very weak for us. First quarter, actually both DCM and ECM did. And actually pipelines on both are looking very good. So the fee income was, investment banking was quite broad based. And in treasury, I just want to call out that while trading obviously was a fantastic quarter for many of the banks, but the customer business in treasury was also very strong. We're up, you know, 12% odd in the consumer space, 15% in the corporate space. And so there's a lot of activity all around Frankly, I'll talk about the next slide. It affects not only an improvement in market conditions, but actually I think some improvement structurally in the nature of our businesses overall. So without spending more time looking back, it's generally a very strong quarter from all accounts on the business side. I think what's more relevant is the next slide, slide three. I see the situation right now. I think the prospects for the macroeconomy are actually looking reasonably good. We saw the U.S. data yesterday, 6.4% first quarter annualized. We saw China year-on-year at 18%. Most of our countries are seeing strong growth. Even India, notwithstanding the second stage of the pandemic, I think will come through quite strong. I think India will give up 2-3 percentage points relative to our forecast two months ago. But we were forecasting 12, and I think maybe we'll come in closer to 9 than 12. But there will still be a nice bounce back from last year's negative 7. So we think generally the same growth and we're seeing it across sectors. In fact, we don't have any sector bias, right from what we can see this quite broad ways. Our noon growth reflects that. Last year, it was concentrated in GMT and real estate. This year, it's extended to multiple sectors. So feeling relatively good. I said last year that noon growth is therefore likely to be, you know, mixing with the 4-5%. We've grown 4% now for two years in a row. But just based on the momentum in the first quarter and the pipeline we're seeing, we think we could get to the higher single digits instead of mid-single digits. Free income, I think, will continue to be robust. As I said earlier, for double digits, I think we will do 15% first quarter. I think we should be able to continue doing double digits. Wealth management obviously moves a little bit up and down based on what the markets are doing. Nevertheless, underlying, there are some structural improvements in our wealth offering. One, you know, we were pushing this democratizing wealth idea, which is offering wealth management products into the retirement planning base. And that continues to do quite well. At the end of the first quarter, we had about 800 million in AUM from our retail digital portfolio and our regular savings plan. That's almost 15-20% of the wealth product income today. So that's quite steady. We're also seeing upside from the digital take-up of our wealth products. In the first quarter, whether it was equity or unit class, the people using digital platforms to trade with us grew substantially higher than the offline. So I think that's also structural. I think that will stay. And finally, we've, you know, continuing to change and bring some more annuity products in, like our discussion portfolio, as well as our barbell account, etc. So, we call these core products and the core products have doubled in the course of the last 12 months. So, that gives us a slightly better degree of resiliency in the wealth management of the income state. Now, having said that, all of this still, you know, can get overturned if the market turns south. But, I am relatively optimistic about this. The other area where we see structural improvement is in treasury markets and the customer side. Obviously, we are helped by the markets. The markets are generally kind. But on the customer piece of the income, again, the three areas that our efforts over the last year or so are paying dividends. And that's also to do with transformation and digitization. One is in the distribution setup. I've indicated before that we've been distributing our treasury products into our customer base more and more electronically and, in fact, more and more embedded, whether it's our payments products, into our APIs, into various other forms. So that's helping. We're getting good volume growth from that. The second is use of data. We've increasingly been able to use analytics and data mining to target our customers better. So I think that's helping. And finally, we've also been doing a lot more of Algo, AI driven Algo and trading both for sentiment and for trading our positioning on books. So I just think structurally, you know, in the past we used to say that our T&M business is You know, good for about 225 million bucks a quarter. I think the structural changes in the business will be probably closer to 250 million bucks a quarter now. Now, of course, the first quarter was exceptional. It was double that. But I do think there's some structural changes in Tennessee which are helping them as well. The outlook on expenses, Lakshmi Vilas is obviously just an add-on to just about a couple of percentage points of growth. But at Lakshmi Vilas, we will see some pickup in expenses, partly to support the much stronger business activity that we have predicted. Partly I think we're going to see some wage pressure. So our bonuses will have to go up and some wage adjustments are likely to be made. But net net we think our costs instead therefore will probably be 3 to 4 percentage points up over the 2019 level. This is what we were using as a benchmark and base mark. We go to slide 4. The outlook on the asset quality is also looking very encouraging. As Sophie pointed out, You know, overall portfolio in the first quarter, the price on the upside, the delinquencies are staying really low. If you look at the various moratoriums, the housing loan moratorium in Singapore, out of the 5.1 billion, most of that is now come back to regular, just I think it's some 300 or less than half a billion which has got extended moratorium, but the delinquencies in that are negligible. If you look at the SME book in Singapore, again, we started with about 5 billion in moratorium. That is down to about a billion at the year end. Another 700 million came off moratorium at the end of the first quarter. And we only have four weeks of data, but in the four weeks, we're not seeing any significant pickup in delinquencies in that 700 million. So what's left in moratorium is now about 400 million, which will come off in the end of June. But so far, I'm encouraged. We're not seeing the pickup in delinquencies and cost of credit in these zones coming off moratoriums in the SME space in Singapore. If you look at the other piece in Singapore, we obviously have another pipeline in all of the government-supported programs, the ESG loans. And again, our risk on that is only 10%. The government bears 90% of that risk. That remains to be seen. Half of those customers are paying principal and interest, half of them are only paying interest. We only know in the second half of the year what the delinquencies on that portfolio look like. But like I said, it's 90% government debt. Finally, the moratoriums we had, you know, the biggest moratorium chunk was in Hong Kong, where originally we had about 6.5 billion. At year end, that was down to about 3 and change. Now it's down to about 2.8. Of that, a chunk of that is large profits. I'm reasonably okay with that. But about a couple of billion of that is SME. There, the outlook is going to be unclear for a longer period of time because the Hong Kong authorities have extended that moratorium now into, well into 2022. And therefore, that part of the book, we just have to keep an eye out and watch. But nevertheless, when you put all of that together, it's quite clear that the delinquencies in all of these portfolios are not coming at any range of the levels that we thought they might. And so there might be some upside on that. Second, the new NTA formation is very low. Like I said, across the board, we're seeing pickup in economic activity across sectors. And so we're not seeing a deterioration in our NTAs. And so that's actually quite good. As you notice that from an analysis standpoint, we saw a significant reversal in our general provision. Now, you know, our general provision, which is 4 billion, comprise two things. A chunk of it, the largest chunk of it comes from our models. And then there is another smaller component, which was what we call the management overlay. That was for things that we thought the model wouldn't pick up, like the moratorium, et cetera. The reversals in the first quarter have all come from the model. So we've actually not had to, dip into the extra money, extra reserves we've kept aside. We'll just continue to see what happens to the moratorium before we touch that. But the improvement in the model reserves just show that overall the portfolio is improving. The improvement came from both. It came from an upgrade of names. So some names which we thought were going to be weak have actually improved. They came from a repayment of some monies. I mean, many companies have been able to raise money in the bond market. So some of our exposures got paid down and paid back. In the consumer space, they came from an improvement in the flow rate. So overall, the reversal in GDP just reflects an improvement in the portfolio quality. And as we see, looking ahead, as I said, fully allows it likely to be below 1 billion. We guided about a billion earlier. I think I'm pretty confident it will be below that. How much below that is still difficult to say. But like I said, overall, it's looking relatively promising. All right, I want to shift to a second theme, not just Outlook and Rezaz. But, you know, somewhere in the early part of the pandemic, in the summer, we decided that, you know, there might be an opportunity for us to do a few things to help us emerge stronger from the pandemic, see if we could use the pandemic to reposition the bank and gain some opportunities for the future. And we've actually got a dozen different things that we're trying to do. But broadly speaking, they fall into these three categories. One, we figure this is an opportunity to look for some inorganic expansion. We've said before that we're always open to bolt-on deals if we think they may extend. Second, we figure that this is an opportunity for us to build some new lines of business. And this is principally leveraging our technology capabilities. It's been quite interesting to me over the last year or two how many people are willing to come into us and asking us to leverage the technology capabilities we've built in the last five, six years. And we figured there's an opportunity to try and monetize some of this. More generally, I'm convinced that a big opportunity is to be part of the new digital infrastructure that are going to come into place as the world progresses down this digital trend. And I sometimes think, people often joke about this. You think about the gold rush. The people who made the most money in the gold rush were not the gold miners. They were the people who sold the picks and the shovels. I think there's an opportunity really for somebody with good technology capabilities to provide the infrastructure and the picks and the shovels of the new world. And that's what we're trying to do as we think about the new businesses that we can leverage and build. And third, obviously, we figured that, again, given our business strength, there are some businesses that we could step on and accelerate. Now, in this slide, I've listed some of the things that we've already announced. There's some that we haven't. I'm going to, I have a slide each in the first pile, but let me just quickly touch on retail wealth and supply chain because I don't have a slide on those. Retail wealth I spoke about earlier. This is a Robin Hood phenomenon to my mind. Given the mass take up of wealth products in the mass market, if you have the right digital platforms and the right digital product trees, I think you can do well. We've doubled down on this and as I said before, today 15 to 20% of our wealth products are really going into this base. So I'm actually quite pleased with that. We are going to continue to push on that. On supply chain, I've talked about before, people are digitizing the supply chain. The fact that we have all of these API protocols and we have a very efficient ability to plug into whether they're anchor-driven supply chains or industry supply chains or platform-driven supply chains, that's proving to be very beneficial. It's helping us drive significant volume in our cash and change businesses and our flow activities. I think some of that is also reflected in the big KASA growth we are getting from the corporate side. So I am not going to talk about those two, but let me take the rest very quickly. So the first, as you know, we did Lakshmi Vilas. I am pleased with the integration of Lakshmi Vilas in SpaceX. It is going quite well. At this point in time, we stabilized the business. The deposits started going up. KASA was up 14% for the quarter. We've done this by rationalising deposit costs, so we've dropped the overall cost of deposit by 40 basis points and that's already beginning to drive some improvement in the economics. We've started picking up the asset base again. Gold loans were up 4% for the quarter. And we've revised and changed the underlying journey and system for the SME and medium and small term loans. We've centralised the credit process for that, so we've overlaid the DBS credit sequence. around that SME area. We've been a little bit more careful on that, particularly given the new pandemic pickup in India. So, we go slightly slow. But overall, the key business metrics are looking good and they're consistent with what we looked at in the fourth quarter when we decided it was a deal worth pursuing. There were concerns earlier about the possibility of asset quality in Lakhimala. Actually, even the asset quality is looking relatively good. It's consistent with what we thought we would see The legacy, as you might remember, we brought on $212 million of net NPA onto our books when we did the deal. That's actually shrunk a little bit because we were able to get some recovery. We're also getting some recoveries on previously written off loans. We've been able to actually focus very hard and do that, so that's been a little bit of upside. Some of the portfolio we knew was weak and we expected to go into NPL has indeed gone into NPL. But the additional SPs we needed on that were not large and we were able to reverse them from the general provisions that we had taken in anticipation when we did the deal. So, next step, we will ask the tracking. Tracking is relatively well. You know, we are not seeing too much stress on any dimension right now. I think it will still take us the next few quarters to start actually making the acquisition spread. But we have a full team in there working quite assiduously to try and make that happen. So I go to the next slide, the Shenzhen Rural Commercial Bank. This is just now recently. It's a smaller stake. I mean, it's a 13% stake, but it's obviously a much larger bank. The interesting thing about Shenzhen Rural Commercial Bank, if you look at the bullets, one, it is a complete private bank. It's been operating since 2005. It's only in Shenzhen. It got a license as a rural commercial bank, but if anybody's been to Shenzhen in East India, you'll know there's not too much rural going on in Shenzhen. And therefore, the bulk of the business is like any other bank's business. It's got a very good retail base. It's got a very good solid SME base. It's got a slightly upmarket res base. It is professionally managed and it is widely held. If you look at the shareholder base of the bank, it's some 32,000 individuals and a significant number of SMEs. The largest key shareholders, each own about 5% of the bank and then employees own a chunk of the bank. So 13%, we're going to be the single largest shareholder of the bank and that gives us a degree of influence in that bank and the activity. As you can see from the numbers on the right, the bank's performance has actually been very good. Its net profit after tax has had a dagger of 11% in the last five years. Its NPL ratios are quite tight. Its ROE is, gold has been 17-18% ROE over the last five years. And its capital adequacy is actually quite strong. So altogether, it's actually a nice hit in the bank. If you look at the next page, it points to three fundamental things I think this bank and this team does for us. Number one, it's really an attractive economic investment. So if nothing has happened, having a 13% stake in a franchise that doesn't manage delivering high ROE is actually quite attractive. And the way the capital treatment works for us is we do equity accounting. So we take 13% of the income and straight add it to our income. That's about 100, 110 million baht to our bottom line. Whereas from the asset side, we really do risk-weighted asset accounting on our investments. So our billion dollars of investment actually translates to RWA for about 3.5 billion, which is about 350-400 million bucks of equity. So on a usage of equity, this is like a 25% return on allocated equity, if you will. So it's actually quite an attractive economic investment in and of itself. Also, as the bank grows, you know, at some stage, the intentions will be like yours, so hopefully there is some upside over there. But the second big upside we have is the opportunity to help build both Shenzhen Rural franchise as well as our franchise. Shenzhen Rural is the size where it's now beginning to want to go international for many of its customers. If customers are looking for services in international trade, they're looking for services in international effects, some of the customers are getting to trades where they want to do ICOs, increase their capabilities, and the bank was very keen to try and start digitizing. That's one of the reasons why they find us an attractive partner. We bring digital capabilities and we bring international capabilities, international presence and some capital markets capability. The flip is true. As we are trying to build out GBA and make it an increasingly important part of our franchise, for us, the supply chain and going down the supply chain is very important. And Shenzhen Rural Commercial Bank's customer base gives us a really good opportunity to go deep into the first, second, third tier of the supply chain of our large anchor customers. So I do think from a business synergy standpoint, it is a win-win on both sides. And I think it will be value exceeded both to Shenzhen Rural as well as to DBS. And finally, the third big upside, of course, as you all know that Chinese regulations have changed and they are now open to foreigners owning even 100% of a local bank. As this bank continues to grow, it is going to continue to need capital. I already mentioned at some stage it will probably IPO. But as it continues to need capital, I do believe that we have the opportunity to continue to increase our position in this bank, given the regulations and the need for capital the bank has. So altogether, I think it's a very good platform for us. It just improves our, it's a creature from day one, and that's a great place to be. If I move to the next slide, the new businesses, I said, you know, we're focusing on how do you build out digital infrastructures which allow us to improve our position in the new economy. The digital exchange, as we announced the last time, the first quarter has been steady. As you know, our digital exchange capabilities are much like Coinbase, and Coinbase, of course, listed at levels we all know. The difference is that Coinbase is mass market and retail, and we are being very judicious. We are approaching this as a wealth proposition for accredited investors and for professional institutional counterparties to start with. Despite this and despite the careful way in which we are expanding the business, the first quarter numbers have actually been quite encouraging. We have got 80 million of assets under custody today. We have got 120 wealth customers. The pipeline of customers is hundreds more. We have just been careful about who we add on. We have got 80 million under custody. The total trading volume has gone up by 10x. We are doing about 30-40 million bucks of trading. We are going to do the first security token offering we hope in this quarter. So far it was only the crypto trading capability but the SEO is going to start. We are also going to expand the timings of the exchange from Asian working hours to 24x7. And so I am actually quite optimistic that the coming quarters and certainly the second half of the year we will see us start getting a lot more traction with this business. We go to slide 10. We announced this last week. We set up a technology company together with JP Morgan and Dematrix to focus on trying to create a platform to change the way cross-border payments and settlements work. As you all know, the problem with cross-border payments and settlements has always been a C++ problem. You know, your message to the beneficiary goes in real time, but the settlement goes through hub and spoke. It goes through you know, the sender's correspondent bank and then goes to the receiver's correspondent bank and then finally goes to the beneficiary. Today with leveraging blockchain, you can actually change that whole paradigm. You can actually convert your money into effectively pure money, digitized money, and you can send it across so the settlement happens as soon as the original message reaches. You can also program this. And because we can program this, the actual settlement can be programmed to happen if conditions 1, 2, 3, 4 happen. So that's very powerful. It changes the latency of the process, but it also changes the capacity to program the way inspections get done. Our plan, along with JPMorgan and Semastic, is to make this an open platform. So it's not a closed platform. While we are launching the tech companies, the underlying operating hubs will be many. In the first instance, it will be SingDollar and USDollar. converting into fiat money, but we are actively looking to bring in banks so that other currencies, you know, Euro, sterling, RMB, etc., all become part of the system. And if we can do that, then that will give us essentially the ability to be an important part of the infrastructure that could actually be game-changing for the way payments happen. So if you look at the upsides to us, and obviously, you know, being part of a financial infrastructure is helpful, And, you know, there might be some value in infrastructure over time. It certainly helps us with our own customer value proposition. We think we can go to our client and provide them a completely different way of doing not just money transfers, but also doing other things. The DVPs, the delivery versus payment, the payment versus payment, the effect market, the security market. We think all of these can be reimagined with this construct. And finally, the third thing it gives us is what I referred to before. We have been able to take some of our technology that we have built and actually license it to the new company. So it does give us a new revenue stream from software or technology services, if you will. Like I said, if you want to space, we continue to look for other opportunities to do similar activity where we can effectively use software as a service to build a new set of revenue streams for ourselves. Finally, the last one I want to talk about was the Securities Joint Venture. We announced it in September. We got approval in September. As you can see from the right-hand side, we have 51% ownership. The other 25% is by SOEs which is controlled by Sunrise HACAC. 24% is by SOEs controlled by the Sunrise Huangpu District. But we do have an option to purchase back from these SOEs in three years. The approval was in September. The legal incorporation happened in due course in January. All our on-site inspections by the regulators were completed in March. We've been able to put in all the infrastructure. The technology is in place. We've hired the team and the people. We have about 100 headcount in place at this point in time. We're just waiting on the business license to be issued to us from the regulators post the inspection. And we expect to get that anytime in the next few weeks. We are quite optimistic about this business because obviously the two-way flows in and out of China are expanding. Already even without this entity, our focus on institutional investor space and the custody space in China has been paying us rich dividends. But we think with this entity we will be able to accelerate that business and activity to a different level. So, let me stop there. It gives me a good sense both for our view on the core business as well as some of the things we are trying to do so that we can reposition the bank to emerge fundamentally differentiated and much stronger from this crisis in the coming years.

Okay, we'll now take questions. Thank you, Phil. Anna, over to you.

Thank you. Ladies and gentlemen, we will now begin our question and answer session. If you would like to ask a question, please press 0 followed by 1 on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press 0 followed by 2. Again, that's 01 on your telephone keypad now. Your first question is from Rebecca, who's from S&P Global Market Intelligence. Your line is now open, Rebecca. Please go ahead.

Hi, good morning. I've got two questions. First, I was wondering, do you think the allowance write-back is too early, and do you expect more write-backs this year? And the second question is, how do you view your NII panning out for the rest of the year as very low? Do you expect NIMS to stabilize at current levels or do you expect a further rise or fall? Thank you.

Thanks for the question, Rebecca. On the allowance write-back, I was actually careful to point out that we have two categories of allowances, one which are driven by models, and the models reflect effectively what is happening in the market. There is another component about the billions of it pointed out, which we created as a separate management overlay for things like the moratorium and other uncertainties. The second category I said we are not touching because we think it might be too premature to start writing that back before we know what is happening. The model-driven outcomes we can't control. The model, the outcome just reflects what is happening to the underlying portfolio. There's an upgrade of accounts so companies start performing better, which happens. So a chunk of that is because the companies have improved their performance. If the exposure to some names reduced, that happens because some of the weaker names have paid us back, then the model just turns out a number and the number is what the number is. The auditors don't let you actually change that number very much. But the broader question is, you know, what is the outlook and analysis? I do think that the overall prospects for the portfolio are looking better than I thought, even three months ago. Monitorings are looking better. The sectors are looking better. We're not seeing weaknesses in any particular sector. The consumer flow rates are looking better. So I would not be surprised if we actually wind up seeing reversals this year, which I had not anticipated three months ago. The second question on NII, NII guidance, our NIM guidance, they haven't changed. You know, we said earlier that we think we'll be somewhere between 145 and 150 basis points in NIM. We think that's likely to be the case. There's still a couple of headwinds on NIM. One is that rates are still coming off. Ivor came down to nine basis points. LIBOR came down to record lows. So that is still a reverse pattern. So while the $10 rates have been holding, the Hong Kong and US dollar LIBOR rates have been creeping down. The second challenge obviously we still have a residual portion of our fixed rate portfolio which has still got to reprice and that reprice will cut to its recurrence to the course of this year. So that is a second headwind. There is a little bit of upside and the upside obviously comes in the fact that the longer end of the yield curve is picking up and so you have the opportunity to put on some duration. We are very conscious because I am concerned that you might actually see some massive inflation steepeners at the very long end. So I'm reluctant to, you know, go to the 10-year level. And there is some pickup, but not a lot more. But when you put all of that together, I think a guidance of 145 to 150 NIM, I think it's still relatively safe.

Thank you. Thank you, Rebecca. Your next question is from Tanya Ponce from Chinchara. Your line is now open. Please go ahead.

Hi, I have three questions. The first one, are you interested in Citibank consumer assets in Asia? Do they have any appeal to DBS? And second question, given the recent huarong fallout in China, is DBS reducing exposure to Chinese FOEs? Third question, please could you comment on the property market in Singapore Do you see a need for cool down measures? Thank you. Sorry, do you see any? Cool down measures. Cool down measures.

Cool down measures. Cool down measures.

Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures.

Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. Cool down measures. But looking aside, we will, as we said before, we are always open to looking at assets that could be incremental to our franchise. And certainly in countries where we do have a franchise, we will take a look at those assets. I think the process hasn't started yet. It will start in due course. We know that when we did the ANZ deal, that was actually quite beneficial to us. It gave us scale. It was very effective. So, yeah, in due time, we will take a look at that. I also want to hasten to add though that, you know, I've said this several times before, we're very disciplined. So, you know, the economics must make sense, you must make sure that you have the capacity to be able to do it, and so on and so forth. And so if it, you know, winds up to be a skirmish and a, you know, bidding frenzy, then you might not see us in the middle of that. On the Chinese SRE, we've actually been quite circumspect with our Chinese SRE management now for several years. We stopped actually relying on state support in our credit assessments 5-6 years ago. We think of the Chinese SOEs on a standalone basis. We apply all our standard credit assessments and judgments and dealing with them. And therefore, at this point in time, we've not had any reason to tighten up or reduce exposures to any Chinese SOEs and precipitously. We obviously, in different sectors, we've been quite thoughtful. about managing, I suppose, but that's been now for the last two years, so there's nothing to say at this point in time. And finally, a question on the Singapore property market and measures. Frankly, your guess is as good as mine. I don't really have a good sense for what the policies might think and do. It is a fact that housing growth bookings have been at record levels, and I do think some of it reflects people's view that you might see some cooling measures, and so people are trying to get ahead of that, but I don't have any further insights other than that.

Thank you.

Thank you. As a reminder to our participants, if you would like to ask a question, please press 0 followed by 1 on your telephone keypad and wait for your name to be announced. If you'd like to cancel your request, please press 0 followed by 2. Again, that's 01 on your telephone keypad now.

Okay, if there are no further questions. Okay, we have one from Vivian from Business Times.

Vivian, your line is now open. Please go ahead.

Thank you. This is regarding the certain bank acquisition. I'm wondering what this means for your greater Bay Area strategy and if you could share more details on BDS market share and penetration it has in that particular region. And my second question would be on updates on the bank's review of physical office space requirements, whether it tends to reduce its physical footprint. Thank you.

Sir, we've actually previously announced that the GBA is a big part of our agenda and strategy. We're not that dissimilar to several other banks who also see that as a big opportunity. For us, leveraging our Hong Kong franchise as well as our presence in China is the beneficiary. We've been focused on this now for two years and it's actually giving us very good traction. Our growth rates there are substantially higher than the growth rates in the rest of China or the rest of Hong Kong. And we're doing that by really focusing on both the new economy sectors, but specifically leveraging the supply chain connectivity as you go down. And eventually as the WebConnect opens up, we'll obviously look at that as well. But from that standpoint, the Schengen Rural Partition will be very beneficial because they bank some 250,000 SMEs up and down the entire system, and it gives us the ability to go deep into supply chain. Leveraging our digital tools and capabilities and working in partnership with them, providing those digital capabilities into that customer base, I think will be extremely helpful. Like I said before, I think we can also provide them a lot of other international services for their customers. So, I think that this 13% ownership and partnership can actually be quite a game changer for us in terms of expanding our franchise in GBA. The second question on property space, we said earlier that when we announced thinking about the future of work, that we're giving our employees the flexibility of working from home up to 40% of the time, you know, two days a week or alternate weeks or something like that. And as we do that, over the next five, six years, the various leases come up. We anticipate seeing a reduction in our overall requirement by about 20%. We won't see full 40%, we'll see about 20% because we're reshaping the offices to promote more celebration, more participation, more collaboration. But we will see some reduction. And so we already announced giving up some space in Hong Kong, some space in Singapore. And that's part of that thinking and that plan.

Thank you. Thank you, Vivian. Our next question is from Diage. Your line is now open. Gula, please go ahead.

Hello. Hi, Gula. And thank you for the briefing and congratulations on your very good results. Can you hear me?

Yes.

Okay. I have three questions. The first one is, I think you said you have $4 billion in GPs. And so what is the portion of your management overlay versus what you can write back from your MED model? That's the first question. That's for this year, for 2021. And the second question is, does your CET1 include the acquisition of the Shenzhen Rural Bank? And the third question is, can you do an update on the progress of Digibank in India and Indonesia? And have the new Singapore Digital Bank provided any competition to you yet. Yeah, that goes with it. Thanks.

So, why don't I let Chokwe take the first two questions on the break up the lances and the CETs and then I'll make some comments and then we'll be back.

Yeah, so your first question on the management overlay, so it's about 1.3 billion. But we also told you that it's about a billion above the LES requirement. So unless we are prepared to kind of take a hit on the CET1 ratio, you should assume that maybe we would sort of cap it at about a billion. And the pace will depend on sort of the progress as Sirish has mentioned. I see consumer banking, the more local, local sort of situation would free up sort of the duty first in the locations in consumer banking followed by SMEs and the moratoriums take a lot. And then for the larger corporate, we'll have to sort of monitor sort of the social and economic situation as the borders open. Your second question is on the CD1. The time when we announced it, you said it would be a 0.2 percentage point impact. It's roughly 0.16 percentage point. It's not fixed.

And a third question on Digibank in India and Indonesia. In both countries, we've been going slow on the asset side of the balance sheet. In the last part of the trust from last year, was to use the Digibank to do more unsecured lending. But the environment has not been conducive to do that. And so we've deliberately slowed down the asset side of the balance sheet, particularly in India. On the liability side, the consumer side is continuing to do well. It continues to do slightly better in Indonesia than in India, interestingly. Partly it has to do with the last mile interfaces and the fact that the COVID comes in the way of that. But nevertheless, we've seen steady progress. It's not . We've seen steady progress. In Singapore, you know, nobody has actually launched any Digibank yet. I don't think it will happen until 2022. So, no, we're not seeing any impact at this time.

Yes, thanks. Okay, thanks. Thank you. Thank you, Sirius. I'm afraid that's all we have time for today. Thank you, everyone, for tuning in. The next briefing is the analyst briefing. And that will start at 11.30. Thank you.

Thank you.