DBS Group Holdings Ltd

Okay good morning everybody and welcome to DBS's fourth quarter and full year 2025 financial results briefing. This morning we announced for the full year that we achieved record income and profit before tax. Net profit came in at 11 billion with ROE at 16.2%. For the fourth quarter net profit was 2.36 billion. With us today, our CEO, Tan Xu Shan, and our CFO, Cheng Sok Huy. Without further ado, let me invite Sok Huy Yat to give us more colour. Thanks, Agnes.

Good morning, everyone, and happy Chinese New Year in advance. Okay, slide two.

On the highlights, we delivered a strong set of results for full year 2025. Pre-tax profit rose to a new high of $13.1 billion. Return on equity was 16.2% and return on tangible equity was 17.8%. Total income grew 3% to a record $22.9 billion despite a challenging rate environment. Average SORA and HIBOR both fell by almost 2 percentage points and there were adverse translation effects from a strong Singapore dollar. Group net interest income was nonetheless modestly higher, driven by record deposit growth and proactive balance sheet management. Fee income and treasury customer sales both grew double digits and reached new highs, led by wealth management. Markets trading income rose to the highest level since 2021. The cost-to-income ratio was unchanged at 40%. Net profit was 3% lower at $11.0 billion. This was due to higher tax expenses of $400 million from the consequential implementation of the 15% global minimum tax. For the fourth quarter, pre-tax profit was $2.8 billion, down 6% from a year ago. Total income declined 3% to $5.33 billion as higher fee income and treasury customer sales were offset by the impact of rate headwinds and the absence of non-recurring gains recorded a year ago. Asset quality remained sound. A previously watch-listed real estate exposure was prudently recognised as an MPL during the quarter, contributing to higher specific allowances. The impact was partially offset by a release of general allowances set aside in prior periods. Allowance coverage stood at 130% and at 197% after considering collateral. Capital levels stayed strong. The transitional CET1 ratio was 17.0%, with a fully phased-in ratio at 15.0%. The Board proposed a final total dividend of $0.81 per share for the fourth quarter, comprising a $0.66 ordinary dividend, up $0.06 from the previous payout, and a $0.15 capital return dividend. The Board remains committed to managing down the stock of excess capital and, barring unforeseen circumstances, plans to maintain the $0.15 per share capital return dividend each quarter through 2026 and 2027. Full year performance. Slide 3. For the full year, total income and pre-tax profit were records. Group net interest income was modestly higher at $14.5 billion, a new high, as record deposit growth and proactive hedging offset the impact of rate headwinds. Within this, commercial book net interest income fell 4% or $549 million as net interest margin narrowed due to the rate's impact. Fee income rose 18% or $730 million to a record $4.90 billion, led by wealth management. Commercial book other non-interest income was $2.13 billion. Treasury customer sales to wealth and corporate clients grew 14% to a new high, but the increase was offset by lower other income, which had non-recurring gains a year ago. Markets trading income rose 49% of $452 million to $1.37 billion, the highest since 2021, benefiting from lower funding costs and a more conducive trading environment. Expenses increased 4%, or $354 million to $9.25 billion, led by staff costs. The cost-income ratio was unchanged at 40%, and profit before allowances rose 2%, or $249 million to a new high of $13.7 billion. Total allowances were 27% or $169 million higher at $791 million. Specific allowances were $854 million on 19 basis points of loans, largely due to the real estate MPL in the fourth quarter. General allowances of $63 million were written back during the year, including the release of allowances previously set aside for the real estate exposure. There was a one-time item relating to the Bank's CSR commitment announced in 2023 to allocate up to $1 billion over 10 years to support vulnerable communities. With $100 million set aside from the year's profits, the cumulative amount since 2023 for CSR stands at $300 million. Next slide. Fourth quarter year-on-year performance. For the fourth quarter, pre-tax profit was $2.80 billion, 6% lower than a year ago. Group net interest income declined 4%. Within this commercial book, net interest income fell 6%, or $239 million to $3.59 billion, as net interest margin narrowed due to the rate headwinds. Fee income rose 14% or $131 million to $1.10 billion, led by wealth management. Commercial book other non-interest income was $486 million, within which Treasury customer sales rose 13% or $56 million. Expenses declined 1% or $23 million to $2.37 billion. The cost-to-income ratio was stable. Profit before allowances was $2.96 billion, 5% or $151 million lower. Total allowances were unchanged at $209 million as higher specific allowances were offset by a write-back of general allowances. Next slide. Fourth quarter. Quarter-on-quarter performance. Compared to the previous quarter, fourth quarter net profit declined 20%. Group net interest income was marginally higher. Within this, commercial book net interest income rose 1% or $34 million as deposit growth momentum was sustained. Deposits increased $16 billion or 3% in constant currency terms, offsetting the impact from lower SORA. Fee income fell 19% or $258 million and commercial book at the non-interest income declined 16% or $92 million due to seasonally lower client activity. Markets trading income fell 65% or $285 million from the previous quarter's high base and seasonal factors. The business also took the opportunity to rebalance the portfolio, which will position us well for 2026. Expenses declined 1%, or $21 million to $2.37 billion. Specific allowances were higher, partially offset by a general allowance write-back. Next slide, net interest income. Compared to the previous quarter, group net interest income was marginally higher at $3.59 billion. Net interest margin declined three basis points to 1.93% as SORA continued to trend lower during the quarter. the impact of lower rates was offset by two factors. First, balance sheet hedges that had been proactively increased over the past few years helped mitigate the decline in net interest margin. Second, deposit growth remained strong. Deposits rose 16 billion, or 3%, in constant currency terms during the quarter, bringing the full-year increase to 64 billion, or 12%, the largest absolute increase in the bank's history. The growth outpaced loans and the surplus was deployed into liquid assets. This was accretive to net interest income and return on equity, though it modestly reduced net interest margin. For the full year, group net interest income was modestly higher at $14.5 billion As balance sheet hedging and deposit growth offset the sharp declines in SORA and HIBOR, as well as adverse FX translation from a stronger Singapore dollar. Commercial book net interest income declined 4% from a lower net interest margin. Next slide, deposits. During the quarter, total deposits rose 3% or $16 billion in constant currency terms, mostly from CASA inflows. CASA, current and savings account, increased in both SING dollars and foreign currencies. SING dollar CASA rose from seasonal year-end retail inflows and a continued shift of funds from Treasury bills back into deposits. Foreign currency CASA growth was driven by both wealth and corporate clients. For the full year, total deposits grew 64 billion, or 12% in constant currency terms, the largest absolute increase in the bank's history, with over two-thirds of the increase in CASA. liquidity remains healthy. The group's liquidity coverage ratio was 155% and net stable funding ratio was 117%, both comfortably above regulatory requirements. Next slide, loans. During the quarter, gross loans rose 2% or $10 billion in constant currency terms to $451 billion. The increase was led by trade loans, with modest increases in non-trade corporate and wealth management loans. As deposits continued to grow faster than loans, the surplus was deployed into liquid assets. This was accretive to net interest income and return on equity. For the full year, loans rose 6% or $24 billion, with broad-based growth across trade, non-trade corporate and wealth management loans. And you can see from the chart, the high-quality liquid assets for the year increased by $42 billion. Fee income. Next slide. Growth fee income rose 15% for the full year to a record $5.86 billion. Growth was broad-based and led by wealth management, which increased 29% to a new high. Transaction service and loan-related fees also reached record levels, while investment banking fees strengthened. For the fourth quarter, gross fee income rose 12% from a year ago to $1.38 billion. The increase was led by wealth management fees. Transaction service and investment banking fees were also higher. Compared to the previous quarter, gross fee income declined 13%. Wealth management and loan-related fees fell due to seasonal factors, while transaction service fees were lower compared to a strong third quarter. the declines were partially offset by higher card fees. Next slide. A wealth management segment. The wealth management segment comprises treasurers, private client and private bank. Wealth management was a key growth driver for the year. Full year segment income rose 9% to $5.68 billion underpinned by record investment product and bank assurance sales. Assets under management grew 19% in constant currency terms from a year ago to a new high of $488 billion. This quarter, we have started to disclose net new money at the bottom of this slide. The figures include inflows from Treasures, Treasures Private Client and the Private Bank. Total inflows for the three segments were $12 billion for the fourth quarter, bringing full-year inflows to a record $39 billion, 21% higher than 2024. For the fourth quarter, segment income rose 5% from a year ago to $1.30 billion, driven by higher non-interest income from stronger investment product and bank assurance sales. This more than offset a decline in net interest income from lower rates. Next slide. Customer-driven non-interest income. This slide shows non-interest income from the commercial book that's customer-driven. While fee income and treasury customer sales are recorded under different P&L lines due to accounting treatment, both are driven by consumer and corporate demand for financial solutions and should be viewed together. For the full year, customer-driven non-interest income rose 16% to $7.04 billion, as net fee income rose 18%. to $4.90 billion and Treasury customer sales grew 14% to $2.14 billion. Both were at new highs, driven by broad-based growth and led by wealth management. For the fourth quarter, growth momentum remained strong. Customer-driven non-interest income rose 13% from a year ago, around the average pace over the prior four quarters. The performance reflected our continued efforts to broaden and deepen relationships with wealth, corporate and institutional clients. Next slide. Expenses. Expenses were tightly managed. Full-year expenses rose 4% from a year ago to $9.25 billion, led by higher staff costs. The cost-to-income ratio was unchanged at 40%. Fourth-quarter expenses were 1% lower, both quarter-on-quarter and year-on-year at $2.37 billion, driven by lower staff costs. Next slide. Hong Kong. Hong Kong's full-year net profit rose 3% in constant currency terms to a record $1.61 billion, as total income increased 6% to $3.52 billion, driven by higher non-interest income. Net interest income was 3% higher at $2.09 billion from deposit growth. Net interest margin was slightly higher as the impact of lower HIBOR on the commercial book was offset by an improvement in markets trading. Deposits rose 10%, led by CASA inflows while loans grew 1%. Surplus deposits were deployed into non-loan assets supporting net interest income. Net fee income rose 22% to $993 million led by wealth management. Other non-interest income was 7% lower at $441 million as lower markets trading non-interest income was partially offset by higher treasury customer sales. Expenses increased 3% to $1.33 billion from higher staff costs. Total allowances doubled to $296 million, reflecting higher specific allowances, largely from the real estate NPL in the fourth quarter. Next slide, non-performing assets. The NPL ratio was unchanged from the previous quarter at 1.0%, notwithstanding the recognition of the real estate exposure as an NPL in the fourth quarter. The exposure had been on our watch list for two years. The borrow is currently not in default status. We reviewed the credit and took a prudent decision to downgrade it to MPL following our subjective default assessment. Next slide, specific allowances. Specific allowances for the fourth quarter rose to $415 million, with a large part of the increase due to the real estate NPL based on asset recovery values. The increase was partially offset by a release of general allowances that had been previously set aside for the exposure. For the full year, specific allowances amounted to 845 million or 19 basis points of loans, broadly in line with our through cycle average. Next slide, general allowances. As at end of December, total allowance reserves stood at $6.28 billion, comprising $2.42 billion in specific allowance reserves and $3.86 billion in general allowance reserves. The slight decline in GP reserves from the previous quarter was partly due to the release of general allowances previously set aside for the real estate MPL, which were reclassified to specific allowances. As communicated previously, we set aside GP once a case is placed on the watchlist. In the event that the watchlisted case is classified as MPL, the GP set aside will be released. General allowance reserves remain prudent, with the GP overlay at $2.4 billion out of the total $3.86 billion. So to recap, the GP overlay of $2.4 billion is in addition to baseline GP generated by the model, and it takes into account stress scenarios such as heightened geopolitical and macroeconomic risk. Allowance coverage was at 130% and at 197% after considering collateral. Next slide, capital. The reported CET1 ratio increased 0.1 percentage points from the previous quarter to 17.0% driven by profit accretion and stable risk-weighted assets. On a fully phased-in basis, the pro forma ratio was 15.0%. The leverage ratio was 6.2%, more than twice the regular tree minimum of 3%. Next slide. The Board proposed a final total dividend of $0.81 per share for the fourth quarter, comprising a $0.66 ordinary dividend, up $0.06 from the previous payout, and a $0.15 capital return dividend. This brings the total dividend for the year to $3.063. per share or $8.68 billion, an increase of 38% from the previous year. Assuming dividends are held at $0.81 per quarter, annualised dividends will be $3.24 per share, representing a dividend yield of 5.5% based on last Friday's closing share price. In summary, we delivered record full-year pre-tax profit and achieved a 16% ROE, demonstrating the resilience and adaptability of our franchise amidst rate and tax headwinds. Fee income and Treasury customer sales reached new highs, led by wealth management, while deposit growth was the strongest in the bank's history. While rate pressures and geopolitical tensions are expected to persist, the quality of our franchise and strong balance sheet provide a solid foundation for the year ahead. Thank you for your attention. I'll now hand you to Sushant.