DBS Group Holdings Ltd

Good morning, everyone, and welcome to DBS's fourth quarter and full year 2024 financial results media briefing. This morning, we announced record earnings in 2024 of 11.4 billion. ROE of 18%, it's one of the highest among developed market banks. To tell us more, we have our CEO, Piyush Gupta, Deputy CEO, Tan Su Shan, and CFO, Ching Sok Hui. Without further ado, Sok Hui, please.

Good morning, everyone, and a very happy Chinese New Year to all. We delivered a record performance for full year 2024. Net profit rose 11% to a new high of $11.4 billion, with return on equity at 18.0%, sustained at the previous year's record. Total income rose 10%. to $22.3 billion from broad-based growth. Commercial book net interest income grew 5%, led by a 4 basis point expansion in net interest margin to 2.80% and balance sheet growth. Net fee income crossed $4 billion for the first time led by wealth management, while Treasury customer sales also reached a new high. Markets trading income rebounded 27% to $922 million. Expenses were 10% higher, with City Taiwan accounting for 3 percentage points. The cost-to-income ratio was unchanged at 40%. For the fourth quarter, net profit grew 10% from a year ago to $2.62 billion. Total income rose 10% to $5.51 billion from growth in both the commercial book and markets trading. Asset quality was sound. Non-performing assets rose 4% in constant currency terms from the previous quarter to $5.04 billion as new non-performing assets were partially offset by repayments and write-offs. The NPL ratio of 1.1% was little changed. Specific allowances were at 20 basis points of loans for the fourth quarter and 13 basis points for the full year. Capital was healthy. The transitional CET1 ratio was 17.0%, with a fully phased-in ratio at 15.1%. The board declared a final ordinary dividend, of $0.60 per share for the fourth quarter, an increase of $0.06 from the previous payout. This brings the ordinary dividend for the financial full year to $2.22 per share, or $6.3 billion, an increase of 27% over the previous year. In addition, the Board committed to managing down the stock of excess capital over the next three years. To begin with, it plans to introduce a capital return dividend of $0.15 per share per quarter to be paid out over financial year 2025. For the full year, Net profit rose 11% to a new high. Commercial book total income grew 10% or $1.92 billion to $21.4 billion. Net interest income rose 5% or $757 million to $15.0 billion from higher net interest margin and balance sheet growth. Net fee income rose 23% or $784 million to a record $4.17 billion led by wealth management, which grew 45%. Commercial book other non-interest income was 21%. or $379 million higher driven by record Treasury customer sales and property disposal gains. Excluding the property disposal gains, commercial book other non-interest income was up 15%. Markets trading income rebounded 27% to $922 million as FX interest rate and equity derivative activities benefited from market volatility. Expenses were 10% or $839 million higher at $8.9 billion, with City Taiwan accounting for 3 percentage points of the increase. The cost-to-income ratio was unchanged at 40%. Profit before allowances increased 11% to a record $13.4 billion. Specific allowances were $559 million or 13 basis points of loans, and general allowances of $63 million were taken. There were one-time items amounting to $119 million. They included $100 million that was set aside as part of the Bank's CSR commitment announced last year to allocate up to $1 billion over 10 years for vulnerable communities. For the fourth quarter, net profit rose 10% from a year ago to $2.62 billion. Commercial book income increased 9% to $5.35 billion. Net interest income rose 5% or $194 million to $3.83 billion from a two basis point increase in net interest margin to 2.77% and from balance sheet growth. Net fee income grew 12% or $101 million to $968 million led by Wealth Management. Commercial books at the non-interest income grew 41% to $548 million due to higher Treasury customer sales and property disposal gains. Excluding the property disposal gains, commercial books at the non-interest income was 19% higher. Markets trading income rose 40% of $45 million from the previous year's low base to $158 million. Expenses increased 9% or $190 million to $2.40 billion, while the cost-income ratio remained stable. Profit before allowances grew 11% to $3.11 billion. Specific allowances were 229 million or 20 basis points of loans, while general allowances of 20 million were written back. Compared to the previous quarter, fourth quarter net profit was 13% lower. Commercial book total income fell 1%. Net interest income rose 1% or $35 million as balance sheet growth more than offset a six basis points decline in net interest margin due to lower interest rates. Net fee income fell 13% from seasonally slower wealth management activity and a decline in loan-related fees. Commercial book other non-interest income was 6% higher from property disposal gains. Markets trading income fell 52% or $173 million from the previous quarter's high bays and seasonal factors. Expenses rose 6% and profit before allowances was 11% lower. Total allowances increased by $79 million due to a rise in specific allowances. Compared to the previous quarter, the group's net interest margin rose 4 basis points to 2.15%. Lower funding costs and accounting asymmetry for markets trading more than offset a 6 basis point decline in the commercial book due to lower interest rates. Net interest income increased 4% to $3.73 billion. Commercial book net interest income rose 1% to $3.83 billion as balance sheet growth more than offset the decline in net interest margin. For the full year, the group's net interest income rose 6% to $14.4 billion from balance sheet growth. Net interest margin fell by 2 basis points to 2.13%, as an increase in a commercial book was more than offset by a decline in markets trading. Commercial book net interest income rose 5% to $15 billion from higher net interest margin and balance sheet growth. Net interest margin expanded 4 basis points to 2.80% due mainly to the repricing of fixed rate assets. During the quarter, gross loans rose $3 billion or 1% in constant currency terms to $437 billion, led by a $4 billion increase in non-trade corporate loans. Trade loans declined $1 billion while consumer loans were little changed. For the full year, gross loans rose 12 billion or 3% led by non-trade corporate loans and trade loans. Deposits. During the quarter, total deposits were stable in constant currency terms at $562 billion as sink dollar CASA growth offset a decline in foreign currency deposits. For the full year, total deposits rose 20 billion or 4%, with the increase driven by fixed deposits in the first half of the year and by CASA inflows in the second half. Notably, SingDollar Casa inflow was $5 billion for the full year, in contrast to the $19 billion outflow in the previous year. Fee income. Compared to a year ago, fourth quarter gross fee income increased 16% to $1.24 billion. The growth was led by wealth management fees, which rose 41% to $520 million from broad-based growth and investment product and bank assurance. Cards, transaction service, and investment banking fees were also higher. Compared to the previous quarter, gross fee income fell 6%. Wealth management fees declined 15% due to seasonal factors. Loan-related fees were also lower. The declines were partially offset by increases in cards, transaction service and investment banking fees. For the full year, gross fee income rose 23% to a record $5.09 billion, led by a 45% growth in wealth management fees, excluding City Taiwan, Gross fee income rose 17%, led by a 38% increase in wealth management fees. For the fourth quarter, commercial book non-interest income, which is boxed up in red, rose 21% from a year ago to $1.52 billion, as fee and treasury customer sales benefited from strong wealth management momentum. It declined 7% from the previous quarter due to seasonal factors. For the full year, commercial book non-interest income rose 22% to $6.33 billion led by a record fee income and Treasury customer sales. It also included property disposal gains in the third and fourth quarter. Combining the commercial book and markets trading, total non-interest income for the fourth quarter grew 13% from a year ago and declined 18% from the previous quarter to $1.78 billion. For the full year, it was 20% higher than a year ago at $7.87 billion. Cost-income ratio. For the full year, expenses rose 10% to $8.9 billion, led by higher staff costs, and City Taiwan accounted for 3 percentage points of the increase. The cost-income ratio was unchanged at 40%. For the fourth quarter, expenses of $2.40 billion rose 6% from the previous quarter and 9% from a year ago. The expenses included a special one-time bonus of $1,000 each paid to all staff except senior managers as an additional reward for their contribution to the record performance. A total of $32 million was set aside for this. Consumer banking. Full-year consumer banking and wealth management income rose 13% from a year ago to $10.2 billion. The growth was led by double-digit increases in investment, product sales, and cards. Income from loans and deposits rose 3% to $6.24 billion. as growth in loans and deposits was partially offset by a lower net interest margin. Investment product income increased by 41% to $3.03 billion from higher sales or investment and bank assurance products, while card income rose 22%, to $856 million on higher spending. Both investment products and card income were bolstered by the consolidation of CityTaiwan. Singapore dollar savings deposits grew 4% of $5 billion to $133 billion, in contrast to a $10 billion outflow in the previous period. Wealth management. The strong wealth management performance was a highlight this year. Full-year wealth management segment income grew 18% to a record $5.22 billion. The growth was led by a 45% increase in non-interest income from growth in a broad range of investment products and in bank assurance as well as the consolidation of CityTaiwan. Excluding CityTaiwan, non-interest income grew 37%. For the fourth quarter, wealth management income rose 10% on-year as higher non-interest income, more than offset a decline in net interest income. Assets under management grew 17% to a record $426 billion, with strong net new money inflows of $21 billion during the year. Strong investor sentiment continued to fuel the conversion of deposits to investments, and the proportion of assets under management in investments rose from 54% to a new high of 56%. Institutional banking. Full-year institutional banking income declined 2% from a year ago to $9.16 billion, as higher loan-related fees, cash management fees and Treasury customer income were offset by a decline in net interest income. Loan's income was little changed at $3.38 billion as higher volumes and fees were offset by a lower net interest margin. Trade income declined 4% to $638 million due to lower average volumes and net interest margin. Cash management income fell 6% to $4.08 billion as higher fees and a 1% growth in deposits partially mitigated the impact of lower net interest margin. Treasury customer income rose 6% to $907 million. Investment banking income was little changed. Full-year Treasury customer income rose 20% to a record $2.32 billion from growth across most products. For the fourth quarter, Treasury customer income was $546 million, 8% lower than the previous quarter due to seasonality's slower activity and 21% higher than a year ago from increased sales to wealth management customers. Markets trading income was $922 million for the full year, rebounding 27% as FX interest rate and equity derivative activities benefited from market volatility. Fourth quarter markets trading income fell 52% to $158 million from the previous quarter's high base and from seasonal factors. It rose 40% from the low base a year ago. Hong Kong. Hong Kong's full-year net profit was stable in constant currency terms at $1.60 billion. Total income increased 6% to $3.39 billion driven by higher non-interest income. Net interest income was 4% lower at $2.08 billion as net interest margin declined 11 basis points to 1.80%. Loans were 6% lower in constant currency terms from sluggish loan demand. The impact was partially offset by 3% growth in deposits which were deployed into non-loan interest-bearing assets. Net fee income grew 25% to $831 million led by wealth management. Other non-interest income rose 26% to $481 million from an increase in treasury customer sales and trading gains. Expenses rose 10% to $1.33 billion from higher staff costs and general expenses. Total allowances were 11% higher at $152 million as a decline in specific allowances was more than offset by an increase in general allowances. Non-performing assets. Asset quality was sound. Non-performing assets rose 4% in constant currency terms from the previous quarter to $5.04 billion as new non-performing assets were partially offset by repayments and write-offs. the NPL ratio was little changed at 1.1%. For the fourth quarter, specific allowances were $228 million or 20 basis points of loans. While new IBG-specific provision charges of $124 million were in line with recent quarters, write-backs of $18 million were materially lower due to timing. For the full year, specific allowances were $560 million or 13 basis points of loans similar to the 11 basis points in the previous year. Lower new charges and higher write-backs for IBG were offset by higher specific allowances for consumer banking cards and unsecured loans. Total allowance reserves stood at $6.51 billion with $2.55 billion in specific allowance reserves and $3.97 billion in general allowance reserves. General provision overlays were little changed at $2.4 billion. Allowance coverage stood at 129% and at 226% after considering collateral. Capital ratios. The reported common equity tier 1 ratio was 0.2 percentage points lower at 17.0% based on transitional arrangements, while the pro forma ratio on a fully phased-in basis was 0.1 percentage points lower at 15.1%. The declines were due to an increase in risk-rated assets. Credit RWA rose mainly from currency effects and operational RWA was also higher. The leverage ratio was at 6.7%, more than twice the regulatory minimum of 3%. Dividends. The board declared an ordinary dividend of $0.60 for the fourth quarter. an increase of six cents from the previous payout. This brings the dividend for the full year to $2.22 per share or 6.31 billion, an increase of 27% over the previous year. In addition, the board committed to managing down the stock of excess capital over the coming three years. To begin with, it plans to introduce a capital return dividend of $0.15 per share per quarter to be paid out over financial year 2025. In the subsequent two years, it expects to pay out a similar amount of capital through this or other mechanisms barring unforeseen circumstances. Taking together the ordinary dividend of $0.60 and the capital return dividend of $0.15 per quarter, the annualized dividend yield is 6.7% based on last Friday's closing share price. In summary, we achieved another record performance for the full year. ROE was 18% sustained at the previous year's record and is one of the highest among developed market banks. Balance sheet management supported net interest income growth and improving sentiment drove wealth management fees and treasury customer sales to new highs. While macroeconomic and geopolitical uncertainties persist, our franchise and digital transformations position us well to continue delivering healthy shareholder returns. Thank you for your attention and I'll now pass the mic to Piyush.

All right. Thank you, Sakshi. So, let me again wish you all a very happy new year. I was just mentioning to Gulla here, this is my 61st and last quarterly briefing. So, as you can imagine, I'm actually quite pleased that I'm able to go out on a high note. It's a good thing to do. Our 2024 was actually a solid year. And frankly, we outperformed the guidance that we've been giving through the course of the year. We had 10% growth in income. We sort of guided to high single digit. We actually hit double digit. We had 11% growth in NPAT, which is very solid. And that's despite 100 basis point cut in the rates in the fourth quarter. What is more pleasing is our fee income, the non-interest income, was very solid, 20% plus. Again, we'd guide it to high teens. And so we outperformed pretty much across the board in fees, in treasury sales, in trading, across the board. And ROE of 18% is steady. I think if you look at, compare most global bank ROEs, even the ones which have recovered, have recovered to 13, 14% range. So at 18%, I think we are a relative standout. outside of the financials last year, allowed us to continue to build on much of our agenda. So I'm actually quite pleased with the progress with our technology resiliency, the progress with the use of artificial intelligence and generative artificial intelligence across the company. Our whole approach of managing through journeys, horizontal organization, each of our strategic initiatives actually continue to see very good progress in the course of the year. And finally, as you can imagine, we're pleased also with the very successful transition. I've been handing over to Sushant now for you know, the better part of five, six months has gone extremely well. She's pretty much on top of things. Many of the decisions we are taking now, Sushant has an active role in making them happen. And as you'll see from announcements data, our entire chain of internal succession, the consequential moves are pretty much internally driven. That speaks to the robustness of our bench and our entire talent management succession process. Fourth quarter, just a quick comment. It was solid. We had 10% year-on-year growth in income for the fourth quarter. And again, the fee income was very strong. I saw some of the analysts' comments earlier, and there were some question marks on the quarter. It's a little bit soft. Actually, it's not. 16% gross fee income growth for the fourth quarter is very solid. It's 12% net income growth. And that was actually powered across many things. Wealth grew 41% in the quarter. And this quarter doesn't have city, Taiwan, because that was already there in the previous year. So 40% growth was solid. Trading was up 40% year on year. Now, it's a small number and down quarter on quarter, but fourth quarter is always a soft number for trading. And credit cards, transaction banking, everything was up. Loan fee was somewhat down, but loan fee is very cyclical. It depends on a lot of idiosyncratic loans which come in and go out. And so, very pleased with the overall trajectory of the fourth quarter financial performance. Loan demand was healthy. We grew 3 billion, mostly non-trade loans, which is good. Trade came off a bit cyclical. But non-trade growth because the pipeline is strong and that's despite some paydowns, continued paydowns in North Asia, in Hong Kong, China. It is broad-based, it's real estate, it's metals and mining, it's in Southeast Asia, it's in India, it's in the Western Hemisphere, so fairly broad-based loan growth. Deposits, the good thing with deposits were two. One was that the CASA outflow turned around and we saw an inflow of CASA about, Singdala CASA was up by about 5 billion for the quarter. And so the outflow going out to treasury bills and going out for the last two years, that's now got stemmed. And in fact, we saw an inflow now for the quarter. So that's good news. Another good news is that our overall deposit costs came off. So if you look at our performance summary, deposit costs for the quarter are down by 25 basis points, which means a large part of the market reduction in interest rates, we are able to flow back into our cost of deposits. So that's also good news. Group NIM, as you saw, surprisingly went up, even though commercial bank NIM came off six basis points. Group NIM went up and this is the trading, you know, this is why we started splitting out commercial book NIM from trading NIM. Because the trading book is benefited from both things. One, they fund in the market and market rates come down. That's helpful. But also they do a lot of swaps. They swap from one currency to the other. And that creates accounting anomalies because they get the gains or losses below the line or below the line in the other non-interest income. And they get the drag on the interest income line. So it's a little noisy. And the uplift was really from that. In the third quarter, I had actually already indicated that July, August were challenging, September was slightly better. So we anticipated as we went into this quarter that the trading would give us some benefit. But truth be told that by the end of the early this year, the trading benefit will disappear. So I won't assume that the NIM upside is going to be long lasting. or guidance that name will track around last year's level, maybe a couple of basis points lower is the right way to think about on him. Um, moving on slide. Um, if you want to wealth management, I just want to circle back to, I mean, it's just been a very, very strong, as you know, last, uh, Now this is our third year running when our new net new money is well over $20 billion. It was 23, 24 couple of years last year was still 21 billion. And that's been very strong. People are continuing to put the money to work at the same time. So the deposit investment ratio has been going up as well. And therefore, overall, the 40% plus increase in wealth management fee income is solid. If I exclude the city-Taiwan impact, it's still 37-38%, which is very, very robust. And the good news is momentum continues. We had a very strong start to this year, so it's not slowing down. Expenses, by and large, well managed, you know, 10% growth for the year, masked the 3% from city Taiwan, so it's 7%. The fourth quarter growth, as Sokwi pointed out, we took the opportunity to reward almost all of our staff, 90-95% of our staff with a special bonus for recognizing the performance. We obviously took the, you know, previously declared community contribution. I think Sushant may talk a bit more about that as well. Asset quality. So, you know, if you look at our NPL rate looks like it popped up, but half the pop up is translation, is exchange rate. And it's actually a give back. If you look at the third quarter, we pointed out that we benefited from exchange rate. In the fourth quarter, we gave up on the exchange rate. So if you take out the exchange rate impact, it's not that materially different from most quarters, which is why Our NPL ratio is pretty flattish. Asset quality continues to be quite sound. We are seeing some stress in the property in China, Hong Kong as well, but it's secured to a large extent. And the good news is that where we've had and been able to put two transactions, we've recovered our loan value. So I'm relatively comfortable with where we are on the front as well. And so, you know, As we wind up the year, I think we're in good shape. And we've asked Sushant, since it's going to be her baby, to tell you what she thinks 2025 is going to look like.