DBS Group Holdings Ltd

Good morning and welcome to DBS's financial results briefing. This morning we announced first quarter net profit of $2.93 billion as total income reached a new high. As per our norm, our CEO Tan Tushan and CFO Cheung Sok Fee will share more about the quarter. Both will be speaking to slides which you can see on your screens. The slides can also be found on our investor relations website. And thereafter we will take questions. So without further ado, Sogdi, please. Hi, good morning, everyone. Let me start with slide two, the key highlights. We delivered a strong set of results for the first quarter. Net profit rose 1% year-on-year as total income reached a new high. While return on equity was 17%, return on tangible equity was 18.7%. Total income grew 1% from a year ago to a record $5.95 billion. While we continue to face lower rates and a stronger SING dollar, our strong deposit growth and hedging mitigated the headwinds. Meanwhile, robust wealth management performance drove free income and treasury customer sales to new highs, and market trading income strengthened from lower funding costs and improved trading editions. Compared to the previous quarter, net profit rose 24%, led by fee income, treasury customer sales and market trading income. Notably, group net interest income was little changed on a day-adjusted basis. Asset quality remained resilient. New MPA formation was at the low end of our quarterly range and was more than offset by repayments and write-offs. MPL ratio was stable at 1.0%, and specific allowance at 14 basis points of loans was below our guided range. Capital remained strong. The CET1 ratio was 16.9% on a transitional basis and 14.8% on a fully phased-in basis. The Board declared a total dividend of $0.81 per share for the first quarter, comprising a $0.66 ordinary dividend and a $0.15 capital return dividend. Slide 3. First quarter year-on-year performance. For the first quarter, net profit was $2.93 billion, 1% higher than a year ago. A good net interest income declined 5% as the impact of a lower interest rate and stronger SING dollar were partially offset by hedging and balance sheet growth. Within this, commercial book net interest income fell 7%. or $244 million to $3.48 billion. Fee income rose 16% or $207 million to a record $1.48 billion, led by wealth management. Commercial book at the non-interest income grew 10% or $54 million to $602 million, driven by record treasury customer sales. Market trading income strengthened 7% or $26 million to $389 million supported by lower funding costs and improved trading conditions. Expenses increased 4% or $88 million from higher staff costs. The cost to income ratio was 39%. Profit before allowances of $3.65 billion was little changed. Total allowances of $190 million was almost half that of the previous year when we had prudently set aside $200 million of general provision overlay. Slide 4, first quarter Q-on-Q performance. Compared to the previous quarter, net profit was up 24%. Group net interest income was little changed on a day-adjusted basis as hedging and balance sheet growth offset rate pressures. Within this, commercial book net interest income was 3% or $117 million lower due to a shorter quarter. Key income rose 35% or $383 million. Commercial book other non-interest income grew 24% or $116 million and market trading income more than doubled as all three grew from the previous quarter's seasonally low base. Expenses declined 3% or $70 million to $2.30 billion due to lower non-staff costs. Total allowances were 9% or $19 million lower. Slide 5. Net Interest Income Compared to the previous quarter, group net interest income of $3.49 billion was little change on a day-adjusted basis. Group net interest margin declined 4 basis points to 1.89% as SORA trended lower during the quarter. The impact of lower rates was offset by balance sheet hedges and by strong deposit rolls of $19 billion, or 3% in constant currency terms during the quarter. Compared to the previous quarter, group net interest income was 5% or $187 million lower. The average interest rates at the bottom of the slide highlight the extent of the interest rate declines we have faced. In particular, Singapore interest rates represented by SORA fell from 2.54% in Q1 2025 to 1.07% in Q1 2026. SORA is now less than half of what it was a year ago. Our proactive and nimble hedging strategy as well as strong deposit and loan growth helped claw back a large part of the interest rate headwinds. Our markets trading business also benefited on lower funding costs. Slide 6. Deposits. During the quarter, the momentum in deposits remained strong. Total deposits rose 3% on $19 billion in constant currency terms to $630 billion. The increase was led by CAFA inflows from both corporate and retail customers. As a result, our CAFA ratio improved to 55%. Compared to a year ago, deposits grew 12% or $56 billion in constant currency terms. Liquidity remained healthy. The group's liquidity coverage ratio was 151%, and net stable funding ratio was 117%, both comfortably above regulatory requirements. Slide 7, on loans. During the quarter, gross loans rose 2% or $8 billion in constant currency terms to $459 billion. The increase was driven by non-trade corporate loans as well as wealth loans. Slide 8, fee increases. Growth fee income rose 14% to a new high of $1.71 billion. The growth was broad-based and was led by record wealth management fees, which increased 25% year-on-year due to higher investment product sales and bank assurance. Transaction service fees also rose to record levels and card and investment banking fees were also higher. Compared to the previous quarter, gross fee income rose 24%, led by a 41% growth in wealth management. Slide 9. Customer-driven non-interest income. This slide shows non-interest income from the commercial book that is 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 first quarter, customer-driven non-interest income rose 13% from a year ago to $2.07 billion, as net fee income rose 16% to $1.48 billion, and treasury customer sales grew 5% to $592 million. Both were at new highs, driven by broad-based growth and led by wealth management. Compared to the previous quarter, customer-driven non-interest income rose 31% as the strong performance was amplified by the seasonally low-slow quarter. The continued strength in our customer-driven non-interest income reflects our efforts to broaden and deepen relationships with wealth, corporate and institutional clients. Slide 10, Wealth Management. The wealth management segment, which comprises treasurer, treasurer's private client and the private bank, was a key growth during the quarter. Total income grew 7% year-on-year to a record $1.59 billion, led by a 19% increase in non-interest income, which more than offset the decline in net interest income from lower rates. During the quarter, AUM reached a record $492 billion, up 17% year-on-year in constant currency terms. It was up 1% compared to the previous quarter despite softer market conditions as robust net new money inflow of $10 billion, more than offset market losses. Slide 11, Expenses. Expenses were tightly managed and rose 4% compared to the previous year. The increase was led by higher staff costs. The cost-to-income ratio was 39%. Compared to the previous quarter, expenses were 3% lower due to declines in non-staff costs. Slide 12, non-performing assets. Non-performing assets fell 3% from the previous quarter to $4.72 billion. New non-performing asset formation was at the low end of our quarterly range and was more than offset by repayments and write-offs. The MPL ratio remained stable at 1.0%. Slide 13 on specific allowances. First quarter specific allowances amounted to 157 million or 14 basis points of loan. This was below our guided range of 17 to 20 basis points. specific allowances more than half from the previous quarter, which included the downgrade of a real estate exposure. Slide 14, general allowances. At the end of March, total allowance reserves stood at $6.2 billion, comprising $2.31 billion in specific allowance reserves and $3.89 billion in general allowance reserves. General allowance reserves remain prudent. with the overlay at 2.4 billion. Allowance coverage was at 131% and at 200% after considering collateral. Slide 15, capital. The reported CT1 ratio declined 0.1 percentage point from the previous quarter to 16.9%, driven by higher RWA, partially offset by profit accretion. On a fully phased-in basis, The pro forma ratio decreased 0.2 percentage points to 14.8%. The leverage ratio was 5.9%, significantly above the regulatory minimum of 3%. Slide 16 on dividends. The board declared a total dividend of 81 cents per share for the first quarter, comprising an ordinary dividend of 66 cents and a capital return dividend of 15 cents. Based on yesterday's total share price and assuming that total dividends are held at 81 cents per quarter, the annualized dividend yield is 5.7%. Slide 17. In summary, we had a strong start to the year with record total income and a return on equity of 17% despite continued rate headwinds and heightened geopolitical uncertainty. The quarter was anchored by record wealth management performance alongside robust deposit growth, record transaction services fees and stronger market trading income. This reflects the resilience of our franchise and our ability to capture opportunities and support client needs amidst a challenging environment. While Iran war and its potential second order effects have added uncertainty to the outlook, Our stress tests indicate that our credit portfolio remains sound. Our solid balance sheets with good and general allowance buffers, strong capital position, and robust liquidity underpins our resilience. We also continue to invest in structural growth initiatives, including transformational technology to enhance how we serve our customers and capture long-term opportunities. Thank you very much for your attention. And I'll now pass you to Sushant.

Thanks, Dokhui. So I think the team did a really good job in the start of the year. I like to think of us as that lighthouse in the sea of volatility. You'll see that picture of us, our lighthouse and our annual report on the cover. And I like to think that we have built a fortress balance sheet so we are underpinned by a very strong foundation that will weather the storms ahead, if it's stormy. And if it's not stormy and it's sunny, heck, the light will still be shining and we will be, you know, we'll be partying. We'll be taking on all the growth opportunities ahead of us. So, we're going to weather the storm if things go stormy, but we're also going to get the upside if things look up. We don't know. The truth is, the future this year, the short-term future doesn't look very clear. Politics could go either way. And that's why staying resilient in a time of great stress is so important. And staying resilient means having a strong balance sheet, being nimble in being able to meet the volatilities ahead. But all this time, building a strong recurring base of good fee income, good new-to-bank customers, solid credit, no surprises, stress test, stress test, stress test, and also underpinning this, a constant focus on innovation, AI, agentic AI, and not keeping the eye off the ball on credit stresses. So that's kind of, in a nutshell, the analogy I want to draw for all of you, which was manifested in the first quarter. The first quarter, the team over-delivered relative to our budget and relative to the market analysts. having a record total income, record commercial book total income, record MPPT and record AUM, in spite of interest rates dropping as much as it has, I think does specify the strength of our franchise. So, record total fees, total income are only at 17% or decently to a decent momentum. We were very pleased by the deposit growth. That was certainly stronger than we anticipated. And it speaks to the plumbing work that we've done over the years around getting both operating cash accounts. GTS did a very good job on having a good momentum around new to bank customers and winning a lot more new cash mandates. Wealth did a good job on solid AUM growth. In spite of solid net new money growth, AUM was affected by market performance on the equity side. But nonetheless, our corporate treasury also capitalized on the high volatility by taking on a lot of hedging opportunities for us. We've maintained our fixed asset at $210 billion, but we were able to put on more hedges than we thought. And our NRI sensitivity will remain at $11 million for SING dollars, so $11 million change per basis point for SING dollars. and minus $4 million for US dollar per basis point. So I was really pleased by the record wealth management performance. Wealth management fees were up 25%, and what was interesting was it was broad-based. The new-to-bank AUM growth was also broad-based, but underpinning this broad-based growth was actually very, very strong banker sales. The banker sales was record high, and that speaks to banking long-term sticky relationships. It speaks to us winning share of mine and share of wallet, but also the next generation is involved, and that will create sticky fees for the long term. Transaction banking fees at 2.57% up 8% is also sticky. We hope to do a lot more with it. First quarter net new money was at $10 billion. That was, as I said, broad-based. And you would have read the press report that DBS Private Bank was the first Asian private bank to win the world's best private bank award, first time in Euromoney's 22-year history. Very, very proud of the team there. And for society, you would have also read the press that our Singapore team committed a new commitment of $10 million to help consumers and SMEs weather the crisis in Singapore. Expenses, pretty solid. We're up 4%. That's down from our normal plus 8%. Cost of income ratio slightly below 40. We will remain disciplined. We will remain very cognizant of not having too high a cost rise. So we will be disciplined in our costs. But we will also continue to support clients through these uncertain times. In terms of Middle East exposure, we have very limited Middle East exposure. And our new MPA formation was at the low end. And I think we've been very prudent. We mentioned our GP results at 3.9, our GP overlay at 2.4. We have stress tested the Middle East conflict over and over again. Stress tested all at a 120, 200 effect rates down for group B, group B, etc. I am pleased to say that whilst we're watchful, I think our GP is ample, our GP reserves are ample to cover any unexpected scenarios ahead of us. So we're not complacent, but I think we are very prudent and we have ample reserves. Next slide. So you will recall a year ago, we talked about all the structural growth focuses we have. So obviously wealth management, wealth management both onshore and offshore. We talked about FAPE, financial institutions and II coverage. We talked about TNT. We talked about payments, GPS. And so I'm pleased to report that all that structural focus on growth cylinders are being executed upon. They are yielding fruit and we're seeing the results and it's coming in nicely. So for wealth, both onshore and offshore, we've been quite aggressively growing our footprint. We've launched new wealth centers in China, Hong Kong, Taiwan. And we've also refreshed our TPC offering in places like Indonesia, Singapore, Taiwan. And we're seeing the fruits. Particularly pleasing was Taiwan. Taiwan consumer banking franchise is up strongly. Wealth management in Taiwan is up 30%. And we just opened in Kaohsiung as well, a special SEZ. So we have a new wealth management license there. So I think in Taiwan, GDP growth has been very strong. So the city integration, the new wealth focus, alongside our higher end cards focus is yielding fruit. North Asia is also growing very well. The Hong Kong wealth management business is growing very well, both at the treasuries and at the higher net worth level. China onshore wealth is also growing well as interest rates are low. DBS has a good branding for safety and good wealth management products. So we've been winning market share there as well. Over at IBG, the institutional banking group, our focus on TMT fake and institutional equities is also yielding results. TMT first quarter results were up 14% to 220. More pleasing though is the fee income there was up 27%. Even in China, TMT, our focus has been around both the semiconductor ecosystem for Taiwan, for TMT generally, also for data centers. We're also identifying new winners in AI for healthcare, for logistics, for advanced manufacturing, for robotics, EVs, etc. So really getting deep into those industry knowledge, but also penetrating some of the big, good quality clients. For FIG, our financial institutions group, that grew 10% as well. Our AI coverage for sovereign wealth funds, for fund managers, across banks, non-banks, insurance, Additional asset players is also growing nicely. So that will continue to churn both good fee and non-fee income as well. And then the institutional equity business, which we also put in some new focus. We managed to penetrate new to bank institutional equities. And first quarter, our cash equity business was up very strong double digits. Cash equity is up 77%. and total institutional equity was up 36%. So showing some real new prowess there. We started to do more block trading solutions. We're doing block placements, secondaries, etc. So I'm very pleased to see that starting to bear fruit. Also across the board, whether it's in SME, whether it's in wealth, it's in consumer bank, everyone's been very focused on user bank, very focused on supporting growth, very focused in penetrating with depth and width, And so I think that speaks to us getting a lot more recurring fee going forward. Why? Because as you onboard new clients, you get their cash management, you get their recurring payments fee, you get their wealth, you get a whole host of snowballing of recurring fee. That's just good for business. But as you win, as you get depth in industry coverage, you also get the lead for structuring, the lead for syndicated loans. And you will see that our loan fees are also growing very nicely. On the risk side, a year ago we started to de-risk, we de-risked our SME portfolios in some markets, we de-risked our unsecured consumer loans in some markets, and that's now turning out to be a good decision. So we've been circumspect on risk, we tightened up, and a year later I think we're in a good place.

So, next slide.