Dbs Group Hldgs Ltd S/Adr

Good morning, everyone, and welcome to DBS's second quarter financial results briefing. This morning, DBS announced solid second quarter earnings, which took our first half net profit to record $3.71 billion. Return on equity was 14%, significantly higher than a year ago. To tell us more, we have with us our CEO, Piyush Gupta, and our CFO, Chung Seok-hui. And without further ado, Seok-hui, please.

Good morning. We achieved the record first half performance as net profit rose 54% from a year ago to $3.71 billion. Return on equity rose from 9.5% a year ago to 14.0%. First and second quarter net profit were the two highest on record. Business momentum accelerated in the first half, mitigating the impact of lower interest rates. Loans grew 6%, deposits 3%, and fee income rose 20%, with the first and second quarters the two highest on record. Both Treasury customer flows and Treasury markets income also reached new highs. Underlying expenses were stable, and the cost-to-income ratio was 42%. Asset quality was resilient, with the NPL rate at 1.5%. New MPA formation fell to pre-pandemic levels and was significantly offset by repayments. Specific provisions declined 46% from a year ago to 18 basis points. There was a general allowance write-back of $275 million while overlays were maintained. General provision reserves remained prudent at $4.05 billion. They were $0.8 billion above MES minimum requirements and $1.2 billion above Basel Tier 2 eligibility. Total allowance coverage was 109% or 199% after taking collateral into account. Liquidity was amper, with CASA accounting for all the deposit growth over the past year. The CASA ratio rose 10 percentage points to 76%. The liquidity coverage ratio and the net stable funding ratio were at 136% and 127% respectively. Capital was healthy with the CET1 ratio rising to 14.5%, well above the group's target operating range. The leverage ratio of 6.8% was more than twice the regulatory requirement of 3%. With the full lifting of regulatory restrictions imposed a year ago, the Board declared a second-quarter dividend of $0.33 per share. The script dividend scheme has been suspended. First half net profit rose 54% from a year ago to a record $3.71 billion. Total income was 4% lower at $7.44 billion. A strong growth in business volumes was more than offset by the impact of lower interest rates and lower gains from investments. Asset quality was resilient and total allowances declined by $1.85 billion from the $1.94 billion set aside in first half 2020 to $89 million this half year. Net interest income fell 12% of $589 million to $4.20 billion as 7% loan growth was more than offset by a 27 basis points fall in net interest margin due to low interest rates. Fee income rose 20% or $308 million to a new high of $1.82 billion. All activities delivered strong performances with wealth management and transaction services rising to a record. Other income declined 2% or $28 million to $1.43 billion as record trading income offset low investment gains due to favourable market conditions a year ago. Expenses were 3% or $91 million higher at $3.13 billion due to the erstwhile Lakshmini Vilas Bank. Underlying expenses were stable. Asset quality was resilient. There was a general allowance right back of $275 million from repayments of weaker exposures and credit upgrades. This compared to the $1.26 billion set aside a year ago. Specific provisions were $308 million lower at $364 million. Second quarter net profit declined 15% to $1.7 billion from the previous quarter's record. Total income was 7% lower at $3.59 billion as both fee income and trading income declined from their first quarter highs. Profit before allowances fell 10% to $2.05 billion. Net interest income was 1% or $18 million lower at $2.09 billion as the three percentage loans growth was offset by a four basis point decline in net interest margin to 1.45%. Fee income was $868 million, 9% or $85 million lower than the previous quarter's record. The decline was due to a moderation in wealth management fees from exceptional levels a quarter ago. Other incomes declined 20% or $162 million to $632 million as trading income fell from the previous quarter's high. Expenses were 3% or $44 million lower at $1.54 billion. There was a smaller right back of GP this quarter of $85 million compared with $190 million in the previous quarter. Specific provisions were $36 million lower at $164 million. Next slide. First half net interest income was 12% lower than a year ago at $4.20 billion. Strong loan and deposit growth mitigated a 27 basis point decline in net interest margin to 1.47%. The fall in net interest margin was due to interest rates that remained low following steep cuts by central banks post the onset of COVID in March 2020. Second quarter net interest income was 1% below the previous quarter at $2.09 billion. Higher loan and deposit volumes offset the impact of lower net interest margin. Net interest margin fell four basis points to 1.45% due to an increased deployment of surplus deposits at lower yields as well as lower market interest rates. Next slide. Growth loans amounted to $4.3 billion. Growth accelerated from 1% in the previous half to 6% in first half, with a 3% increase in each of the first and second quarters. Non-trade corporate loans were $7 billion higher in first half, led by drawdowns in Singapore and Greater China. Trade loans increased $6 billion with a rebound in regional trade. Housing loans rose $2 billion as bookings continued to be strong, while wealth management loans were also higher on buoyant investor sentiment. Second quarter growth was led by trade and non-trade corporate loans. Housing loan and wealth management loan growth were sustained at the previous quarter's level. Deposits. Deposits rose 9% in constant currency terms from a year ago to $483 billion. Three percentage points, or $14 billion, of the growth was over the first half. The growth continued to be led by CASA, which enabled more expensive fixed deposits to be released. CASA rose $26 billion in the first half, while fixed deposits fell $13 billion. The CASA ratio was 76%, up 3 percentage points from end 2020 and 10 percentage points from a year ago. Faster-than-loan growth and deposit growth resulted in a loan-to-deposit ratio of 82%, up 2 percentage points from end 2020. Fee income. First half gross fees rose 19% from a year ago to a new high of $2.08 billion. Both the first and second quarters were the highest on record. Wealth management fees in the first six months grew 27% to a new high of $945 million. While market conditions continue to be the major driver of wealth management, the business has also grown structurally due to three factors. First, we have expanded our reach to the retail segment. Secondly, our digital platforms have enabled us to capture more customer flows. Third, we have grown annuity income streams by focusing on a range of core investment products. Insurance fees were also higher as they recovered to pre-pandemic levels. Card fees rose 10% to $334 million as consumer spending recovered from a year ago with growth led by online transactions. Travel spending continued to remain low. Investment banking fees increased 81% to $114 million from a recovery in equity transactions and record fixed income fees. Transaction services fees grew 10% to $454 million from higher trade and cash management activities. Loan-related fees rose 2% to $230 million. Second quarter gross fee income grew 26% from the previous year. All activities rose by double-digit percentages as financial market activity and consumer spending recovered from the trough a year ago. The growth was led by a 31% rise in wealth management fees. a more than doubling in investment banking fees and a 26% increase in cut fees. Gross fee income was 9% lower than the previous quarter as in wealth management fees moderated from the first quarter's exceptional levels. Investment banking fees were higher, while transaction service fees and cut fees were little changed. Loan-related fees declined modestly. Expenses. First half expenses were 3% higher than a year ago at $3.13 billion. Excluding the erstwhile Lakshmini Villas Bank, underlying expenses were stable. Staff costs increased as the business environment improved but were offset by lower occupancy and computerisation costs. The cost-to-income ratio was 42%. consumer banking and wealth management performance. First half, consumer banking and wealth management income declined 12% from a year ago to $2.71 billion. Income from loans and deposits fell 35% to $1.13 billion as the impact of a lower net interest margin was moderated by higher volumes. The decline in income from loans and deposits was partially offset by a 20% rise in investment product income to $1.16 billion and an 8% increase in cut income to $378 million. Assets under management increased 13% to $285 billion. We maintained our domestic market share for savings deposits and housing loans at 52% and 31% respectively. Institutional banking. Full-year institutional banking income was stable from a year ago at 3.0 billion. Cash management fell 42% to 424 million as the impact of low interest rates was moderated by volume growth. The decline was offset by increases in other products led by double-digit growth in loans and investment banking. GTS deposits grew 12% to 177 billion. Treasury and markets. First half, Treasury markets income and Treasury customer income were both at record levels. Treasury markets income increased 31% to $934 million from strong performances in equity and credit trading. Customer income was 13% higher at $913 million, with consumer banking and institutional banking each accounting for half the amount. Second quarter Treasury markets income was $360 million. It was 28% lower than a year ago and down 37% from the previous quarter, which were the two strongest quarters on record. Customer income was 10% higher than a year ago and 13% lower than the previous record quarter. Hong Kong. Hong Kong's first half net profit rose 8% in constant currency terms to $617 million. Total income declined 5% to $1.26 billion as the impact of low interest rates was moderated by higher fee income and loan growth. Asset quality was resilient, with allowances falling 82% or $130 million to $27 million due to lower general allowances. Net interest income declined 19% to $690 million. Net interest margin fell 44 basis points to 1.30% due to lower interest rates, but was moderated by 4% loan growth. Fee income grew 28% to $395 million. All activities grew by double-digit percentages, led by investment products, bank assurance and cash management. Other non-interest income rose 12% to $171 million from Treasury customer sales. Expenses were little changed at $491 million and the cost-to-income ratio was 39%. There was a general allowance write-back of $18 million compared to the $124 million that was set aside a year ago. Specific allowances were $12 million higher at $45 million. Asset quality. Asset quality was resilient as the economic environment improved. There has been little change in loans under moratorium and delinquencies since March. First half new non-performing asset formation declined to pre-pandemic levels and was significantly offset by repayments. As a result, the NPL rate improved from 1.6% six months ago to 1.5%. Specific allowances. The resilient asset quality resulted in first-half specific allowances declining 46% from a year ago to pre-pandemic levels. Specific provision charges amounted to $363 million or 18 basis points of loans. Second-quarter specific allowances were $164 million or 14 basis points of loans. They were 18% lower than the first quarter and 43% lower... than a year ago. General allowances. General allowances reserves of $4.05 billion remain highly prudent. They included general provision overlays built up in prior periods which were maintained. The write-back in the first half for general allowances was from repayment of weaker credits as well as credit upgrades. The general provision reserves were $0.8 billion above MES's minimum requirement and $1.2 billion above Basel Tier 2 eligibility. Allowance coverage was at 109% or at 199% when collateral was considered. Capital ratios. Capital continued to be healthy. The common equity tier 1 ratio rose 0.6 percentage points from end 2020 to 14.5%. Profit accretion and the methodology refinement for market risk-weighted assets were partially offset by an increase in credit risk-weighted assets. The CET1 ratio was above the group's target operating range of between 12.5% and 13.5%. The leverage ratio of 6.8% was more than twice the regulatory requirement of 3%. dividends. The Board declared a dividend of $0.33 per share for the second quarter and the script dividend scheme has been suspended. With a full lifting of regulatory restrictions imposed a year ago, the dividend has reverted to its pre-pandemic level. Based on yesterday's closing share price and assuming that dividends are held at $0.33 per quarter, the annualised dividend yield is 4.3%. In summary, We achieved an exceptional first half, comprising the two highest quarters on record. Strong business momentum was sustained in the second quarter and the pipeline remains healthy. Asset quality has been better than expected. New MPA formation was at pre-pandemic levels and was significantly offset by repayments. Specific allowances were also at pre-pandemic levels, having almost halved from the previous year. The balance sheet remains prudently fortified, with $4 billion of general allowance reserves well in excess of requirements. Our capital and liquidity are also strong. While risks remain, we expect business momentum to be sustained in the coming quarters. We are well positioned to support customers and deliver shareholder returns. Thank you.

Thank you, Sakvi. And again, welcome everybody to our quarterly half yearly results. As usual, I think I'll take a few minutes and just touch, recap some of the things Sakvi mentioned and maybe give you some sense of the outlook going forward. So first, just to underline what Sakvi said, Our business momentum for actually the full half year has actually been extraordinarily strong. Second quarter continued to be as strong as the first quarter. Loan growth of 3% in each quarter was actually far in excess of what we anticipated. And the good news is it was very diversified. So we saw increase in the property sector. We saw increase in TMT. There were increases in the energy sector, particularly renewables and sustainability-related loans. And the loan growth was from greater China. It was from Singapore, Southeast Asia. So very diversified loan growth continues to be very robust. What was particularly pleasing, though, was the fee income, the non-interest income. The fee income has been just quite very broad-based. So wealth management is very strong. First quarter was strong, second quarter was also very strong. And I think that reflects not just the underlying growth in the business, but also some of the digitalization that we've been able to do in that range of products. Transaction banking was strong. Again, reflects some of the digitization that we've been able to do in both the trade and the API linkages we have. Cards has been picked up. At the gross level, it's about 10% where we used to be pre-pandemic. So the rest of it will come with the travel opening up, I would imagine. And investment banking was very strong, both ECM and DCM. DCM on the back of just a large amount of issues being done around the region because of the low interest rate environment. And ECM, a lot of it is still property related. But in general, strong investment banking activity as well. So very diversified fee income growth. And extraordinarily strong treasury markets growth. And as Sokhi pointed out, that was not just trading. Trading continued to be robust in both quarters. But I was very pleased that also reflects underlying customer flow activity. And by the way, for the third time, I think that also reflects the digital activity we've done. We had a lot of electronic origination from the customers today that we did not have a year or two ago. And obviously, our trading was good. First quarter was off the charts. Second quarter was slower. But as I compare our overall trading performance relative to the global majors, I think we've done pretty well through the half year. So second quarter was as strong as first quarter. Overall, first half, quite pleased. I think the other part of the story is, though, as we're looking forward, we continue to see really good business momentum all around. The pipelines are very robust. Now we've died in full loan growth to a high single digit. We grew 6% in the half of the year. We might grow about three in the second half. The reason for the slowdown really is a chunk of the growth in the first half was the trade book. We put on $6 billion of trade assets. Some of that reflected increase in commodity prices. It's unclear to me what is going to happen in the second half. And we might be able to hold that. We might have to give some of that up. So trade is an uncertainty. But the non-trade activity is as robust as it was in the first half of the year. So looking there to be good. Mortgages are also in Singapore. The is also looking decent. We grew 2 billion in the first half. I think it'll slow down. We're expecting only a billion more in the second half. even though bookings in the first and second quarter were well over $4 billion, very strong bookings. So remains to be seen how that plays out. The fee income now guiding mid-teens fee income growth, because again, across each of the product categories we spoke about, we continue to see good momentum. We got into the third quarter with continuing momentum across each of the categories, wealth management, transaction services, payments, et cetera. Everything stayed strong as we went into the third quarter. So feeling relatively okay with that. And expenses continue to be stable, as Sokhi pointed out. If you back out the Lakshmi Vilas acquisition, the rest of the expenses are quite flat. So fairly well controlled. Again, I think all the digitization that we've done over the years is helping in that regard as well. If we take a look at the credit outlook, that is the other big upside we've seen. we talked about NPA formation. It's actually gone back to pre-pandemic levels. And they're all onesies and twosies. There's no other thing. In the first half of the day, we saw A couple of names, not large, but in the auto-related sector, you know, auto components in the, you know, southern China, an auto distributor in Indonesia. We saw something in the textile garment sector which got impacted because of the lockdowns. We saw a little bit to do with building and construction in Singapore. But nothing systemic, and like I said, onesies and twosies. The good news is that for whatever NPA formation is happening, we're getting repayments. So pretty much the entire NPA formation in the first half, almost 80%, 90% of that got set up because we got repayments. Those repayments are also leading to some recoveries on the provision line as the repayments come back. So it's generally looking quite resilient. Our guidance for the rest of the year, I'm saying, you know, we were saying it's going to be short of a billion. Now we're saying it's going to be less than half a billion, pretty sure. We were less than 100 in the first half. And so you can see in the second half, we're still hedging our bets a little bit. And that's mostly because we're not sure what the impact of Delta and the moratoriums might be. Though, other than the macro unease, if you look under the hood a little bit, the portfolio is looking actually quite solid. We're not seeing any signs of weakness across the board. And even the loans and the moratorium, they're all down to about 10% of the levels they were when we started. So the mortgage book in Singapore, we had $5 billion. It's now only $500 million. The SME book in Singapore was $5 billion, and now it's down to about $400 million. The Hong Kong book is down to about a billion and change. And some of these books also, the extensions have been pushed into year end or even into next year. So it just seems to me it's unlikely you're going to see a lot of pain from that in the back end of the year. The good news is the 90% that's come off moratorium, the delinquencies are looking fairly decent. We're not seeing a big pickup in people's inability to pay once they come off moratorium. So actually, that's looking OK. The little uncertainties on the consumer book, by and large, delinquencies are OK. Taiwan's gone up a bit on the cards portfolio. It's the only country where I'm seeing a pickup in consumer delinquencies. Indonesia is holding, but I think Indonesia might weaken in the back end of the year. But net net, you know, we could see some upside. We certainly don't think we'll exceed half a billion dollars on the provision line, if you will. And finally, a last comment on this various new initiatives we've launched. As we talked about last quarter, in the middle of last year, we took a view that the interest rate environment is going to be a headwind for the next two, three years, close to zero interest rates. So in addition to dialing up a large part of the fee income and non-interest income activity that we've been doing in our core business, it would be sensible to start looking for alternate and incremental sources of revenue growth. And we'd sort of shown some of the things that we got. We got a couple of inorganic deals done. We've launched a few businesses which are digital in nature. We launched a couple of new funds activities, an investment banking franchise in China. If you ignore the BAU stuff, like the retail wealth and supply chain, but add the rest of the stuff, I think we'll probably wind up with an incremental $350, $400 million of income from these activities next year, which would be $250 million more than this year. So this should be able to start helping us cover some of the interested shortfalls that we've seen over the last 12, 18 months. Again, it's early to say, if we do continue to get meaningful traction, then we could see more upside in these numbers. But I think that will happen more in the following year than in next year. But that's it. When you look at where we are overall, we are really pleased. It was a strong first half of the year. And we go into the back end of the year with a fairly high degree of confidence. So I think we're happy to take questions.

Thank you, Piyush. We will now open the floor to questions from our media friends on the line. Before you ask your question, it would be helpful if you could state your name as well as the media publication you represent. Diana, we can take the first question, please.

We will now begin the question and answer session. Kindly announce your name and company when posing your question. Please also be reminded to mute your laptop audio to avoid audio interruptions in the background. Audio participants with questions to pose, please press 01 on your telephone keypad and you will be placed in the queue. To cancel the queue, please press 02. Once again, 01 on your telephone keypad now. Our first question is from Rebecca Eswara from S&P Global Marketing Intelligence. Please go ahead.

Hi, good morning. Thank you so much for presenting today. I have two questions. First is, could you elaborate a little bit more on the decline in performance over the second quarter? You mentioned a bit earlier on. And second, do you expect net interest income and NIM to stabilize, or do you expect these two metrics to keep trending lower? Thank you.

Rebecca, I missed the first part of your question. Something you said about we couldn't follow.

Oh, yeah, about the decline in performance over the second quarter. And could you explain a little bit more about it?

Performance over the second quarter. Well, I think the point is the first quarter was an extraordinarily strong quarter. It was just off the charts. We made $2 billion of bottom line in the first quarter. And as you know, that's a global phenomenon. The trading was very, very strong and wealth management was very, very strong. You've seen from most banks around the world that trading was hard to replicate. In fact, we did much better than most global banks. So our second quarter trading results are not that far off. I mean, they're down from first quarter. And similarly, wealth management. If you look at the total income line, where trading's down about $200 million quarter on quarter, and wealth management's down about 100, But the second quarter trading and wealth management results are still significantly higher than any averages that we have or any other comparable period. So that explains, really, the bulk of the fall. The other thing, as you alluded to, is NIM is still down. NIM is down about four basis points between the first and second quarter. And the pace of NIM erosion is dropping off. And if you look at our total NIM in the last 18 months, we're down about 40 basis points. Of that, the biggest erosion happened in the first half and second half of last year, some 17 and 23 basis points each. So the first half of this year only eroded four basis points. It's pretty much leveling off. I think there's still some scope for NIM to continue coming down through the back end of the year, and that's partly driven by the fact that we continue to get surplus deposits. We now have about $30 billion that we're placing with central banks, and the yield on that varies a bit. The yield on that was somewhat lower in the second quarter than the first quarter, for example. So that's a big drag on NIM. But at the same time, it's a very good use of money, because it's ROE accretive, since there's no risk weighting on these assets, pretty much zero risk weighted. And at the same time, it's P&L accretive. And so, as I mentioned the last quarter, for this kind of money, I'm not managing to the name. I'd rather manage to the P&L and manage to the returns.

Diana? Thank you. Thank you. Our next question, Janepon from Jandaran. Please go ahead. Janepon from Jandaran, please go ahead. Our next question. Hello, yes.

Okay, eventually, sorry. I have three questions. The first one, when do you see the bank's business travel to start picking up? Second, the project at 350 million Singapore revenue plus that will come from new initiatives next year, which business or unit will be the biggest contributor? And the third question, are you close to any transactions regarding city's consumer asset sale, and what would be your budget for such transactions? Thank you.

The first question was on travel.

When was it starting?

Does travel open up? I mean, I'm not an epidemiologist or a policy wonk. But from everything that we can see, they're opening up for travel in several countries around the world. In the West, the US has opened up. The UK has opened up. I think there's a high likelihood that as vaccination rates get up, you'll start seeing opening up around the region. So you might see some opening up in the fourth quarter. I think the bulk of it will only happen next year, however. But again, I'm not a soothsayer, so I'm not sure I can give you too much more insights on that one. On the incremental revenue, the chunk of it next year really comes from the two M&A deals because they both bring in revenues from day one. But some of the other activities are also quite useful. We expect to start seeing significant or meaningful numbers now from the funds activities, from the digital activity, digital exchange, et cetera. Some of the others, like participation in Partior or Climate Impact X and so on, we have the early days. We're going to start seeing some transactions start happening only at the end of the year. And so that's not likely to show up in our numbers in a meaningful way anytime soon. On your third question, which is, On the city transactions, frankly, the process is underway. And there's very little more we can say at that time. We indicated earlier that we take a look at some of the assets. We are in the process of doing that right now. When you say what is the budget, you know, you always said we are not price chasers. So we're very mindful of making sure that we do transactions that we can get to be accretive in a reasonable period of time. But from a different slant, as you can see, we're sitting on surplus capital. We have 14.5% capital adequacy, and that's reasonably in excess of our operating range. We like to long-term be close to 13%, so that does give us some cushion without having to go and raise new capital.

Thank you, Piyush. Sorry, I just want to be sure. You say that on the long term, your CET1 ratio should be closer towards 13. So the surplus would be the budget, right?

Well, the surplus is available. You know, budget, it all depends. We could always go and raise more capital if there was a really attractive deal which came our way. But, you know, at this point in time, I just wanted to point out that we could do a deal of up to that amount without having to go back into the market.

But could you say that in dollars term, like, is it going to be, because you have been talking about both on acquisition, which would mean like a few or 400 million something, But I think the surplus currently is in terms of more than $1 billion, if I'm not mistaken.

Actually, the surplus is even more than that. But we paid a billion dollars for the Shenzhen rural commercial deal. For me, it's still a bolt-on. And that was accretive immediately, because the way the accounting works. So that's a billion-dollar asset of capital we put to work. But it was accretive immediately. So if the deal is good and the capital accretion is good, we have the ability to do more than 300, 400 million-size deals.

I see. And when you said earlier that the process is on the way, you were referring to the general process at Citi rather than any transaction that BBF is engaging with the bank?

Yes, the general process at Citi, yes.

I see. Thank you, Piyush.

Thank you. Our next question, Chris Wright from Euromoney.

Please go ahead.

Hi, good morning, everyone. Thanks very much for taking my question today. I hope you're all well. Two questions from me. The first one, your results as it relates to asset quality is very much in line with what we've been seeing, not just in Asia, but around the world and the earnings results over the last two weeks. It's a pattern of returning provisions, a strong outlook for credit losses, NPRs, which either aren't budging or in a couple of cases are even coming down. all of which looks great. And yet, you know, here in Southeast Asia, we look around and we see Indonesia in the absolute worst condition of the pandemic that it has been to date. Malaysia is in trouble. Vietnam, for the first time, experiencing lockdowns. India, of course, has been through terrible suffering. And one finds oneself thinking, how can both positions be simultaneously correct. On what basis can we assume such resilience of the customer base and the markets to which you're exposed outside of places that are clearly doing well, like Singapore? Secondly, just following up on Chania's question about Citi, obviously Citi has 13 disparate businesses on the block, and some seem to make more sense for you than others do. Are you able to give any indication as to which geographies you have engaged discussions with Citi about potential acquisitions here. Thank you very much.

Chris, the answer to your first question is obvious and that is that the impact of the pandemic on health systems and on consumer demand is evident in some small sectors and those sectors are really actually not large in the scheme of the global macro economies. So if you look at the PMI data, you look at the GDP growth data, you look at the retail spend data, you look at every macroeconomic data around this thing, it's all north of 50%. In some cases, getting up to 60%. So the fact that you're seeing more spread of the pandemic and more cases happening is really not translating into 90% of economic activity around the region. So what happens is, yes, that the F&B sector, to some extent the tourism sector, the isolated sectors tend to suffer. But certainly, if you look at the nature of our book, our actual exposure to those sectors is very small. So it's not a large part of our business. And the bulk of exposures, which are manufacturing, exports, TMT, property. Think about property. Property prices are on fire around the world. If you really thought that the pandemic should be equated to property, property prices should be down. Property prices are up 10%, 20% in the first six months across the world. You know, so a large part of the macro economy is dealing from the sectors that are really coming under pressure at this time. The other thing I would, my personal submission is, we focus a lot on the number of cases of the COVID. We start focusing more on the actual medical outcomes. You know, how many people are going to hospitals, how many deaths there are. It's actually not consistent and it's not as bad as people were worried a year ago. And so even in countries like India and Indonesia, we talk about 30,000, 40,000 cases. But you translate that to the actual number of actual deaths, et cetera. It's much smaller than people originally anticipated. But the more important thing is this, that the macroeconomic data and indicators continue to be very robust. And that's where the bulk of banking sector portfolios tend to be concentrated. On your second question, we had indicated earlier that the countries that are of some interest to us are, you know, countries that we have a presence in, India, Indonesia, Taiwan. The three markets that we said we would take a closer look at.

Thank you. Our next question, Anshuman from Reuters. Please go ahead.

Hi, everyone. Thanks to see the numbers today. Rich, as always. Sudeep, I want to check with you on, in terms of, you talked about this is more of a, I mean, the impact on the corporate sector is not seen a lot in Southeast Asia in terms of the business exposure. But you've seen other banks, I mean, is DBS benefiting because it has less exposure to the likes of Malaysia, Thailand, other places, versus Hong Kong and China compared to other banks? I mean, we have seen a little bit of an outperformance there. in the results there. And the second question is, how do you anticipate with interest rates remaining low, do you see any changes at all in the environment? And do you expect any changes in the mix of your business on the interest side? Will there be a recovery next year? Do you expect interest income to improve? Thanks.

So on the first question, obviously the profile and nature of your business makes a difference. I think it's a little bit more driven, Anshuman, by the business mix as opposed to the geography mix. Of course, geography mix matters. And I think we're fortunate that we don't have some of the Southeast Asian countries. I can see in my own book, for example, Indonesia is a little bit weaker than Singapore or Hong Kong. So I can extrapolate this probably true for other Southeast Asian markets as well. But the bigger question is, how much is a consumer and SME portfolio compared to a large corporate portfolio, particularly if you have unsecured consumer and SME? And to that extent, it's quite helpful to us that we have a disproportionately large part of our portfolio in the large corporate and secured business segments. our actual exposure in the SME and the consumer segment, X, the mortgage book in Singapore, which is fine, is really not very large. So I think you see differences based on business sector concentrations, perhaps more than the country piece. And if you look at some of the other banks in the region, they do have larger exposures in Malaysia and Thailand and Southeast Asia. But also, they have larger SME books in some of those countries. So that might have some bearing. Your other question on the interest rate outlook, it's hard to call. I mean, you saw the pronouncements from some of the Fed governors even yesterday. My own take was that you wouldn't start seeing rate hikes into the fag end of 23. But now there clearly seems to be the possibility that you might start seeing it much earlier. In fact, if you look at the dot plots, some people are even beginning to forecast that you might start seeing rate hikes at the fag end of 22, 23. You're seeing some tightening actions in some central banks around the region. But it's hard to say. I mean, I really, again, can't get my mind around what is the inflationary impact or the transient nature of the inflationary impact. Is it going to disappear? Is it going to be around? And therefore, how quickly do central banks need to start acting? I do think the taper will begin sooner. You might start seeing the taper come in quicker. And that will obviously have some bearing on this. as well. In the meantime, for us, it's business as usual. We're seeing a lot of liquidity. If there is a change in monetary policy, I think some of the liquidity might start disappearing. And if the liquidity starts disappearing, we're staying very flush. But if the liquidity starts disappearing, then that's generally helpful from an interstate environment. But it's hard to call.

Also, if I can ask you just one more question. We are seeing the record fundraisings in Southeast Asia, either it's IPO markets or we're seeing M&As or we're seeing sort of, you know, there seems to be a lot and it's happening in Philippines, Indonesia, other markets. How do you, when you talk to corporates, when you look at, talk to executives, is there a feeling that this is here to stay? The capital markets are really broadening out ex-Singapore and Southeast Asia and do you expect more activity in this sector? Thanks.

I think the capital markets are definitely getting more robust across the region and seeing a lot more issuers. So we're also being able to do deals from outside of our traditional Singapore-centric customer base, that is true. I think some of that is driven by just record low interest rates. So people are funding up opportunistically. Some are actually using it even for working capital and not just for investment. But I think there's an investment cycle coming back. And therefore, some of the fundraisings that you're seeing are not just replacement of bank borrowing, the working capital. We are seeing some of the new fundraisings beginning to go into pure investment activity. So I do think that the capital markets activity is going to be fairly solid. With all of the tensions between China and US, I do think you'll start seeing a lot more listings in Hong Kong and in China. So I think that will help the overall sentiment, general sentiment as well.

Thank you. The question and answer session is still open. Please be reminded to mute your laptop audio. If you would like to ask a question, please press 01 on your telephone keypad now. If you would like to ask a question, please press 01 on your telephone keypad now. If there are no further questions, yes. I will now hand the session back over to Edna.

Please go ahead. Okay, thank you everyone. Then if there are no further questions, we'll just bring this time to a close. Just appreciate everyone's time this morning and we'll see you next quarter. Thank you.