Dbs Group Hldgs Ltd S/Adr

Okay, good morning, everybody, and a very warm welcome to DBS's second quarter 2026 financial results briefing. This morning, we announced second quarter net profit rose 9% to a record $3.08 billion as quarterly total income crossed $6 billion for the first time. With us, we have our CEO, Tan Tushan, and our CFO, Ching Tok Hui, to tell us more. So without further ado, Tok Hui, please.

Good morning, everyone. So we delivered a record performance in the second quarter. Net profit rose 9% from a year ago to reach a new high of $3.08 billion, while return on equity was 17.9% and return on tangible equity was 19.6%. Total income grew 6% and crossed $6 billion for the first time. The increase was driven by higher non-interest income underpinned by the structural growth of our customer franchise. In particular, robust wealth management momentum was maintained. Fee income was near record levels and treasury customer sales reached a new high. We also mitigated significant interest rate headwinds with balance sheet growth and proactive hedging. Meanwhile, markets trading income strengthened as we benefited from lower funding costs and capitalised on volatile markets. For the first half, net profit rose 5% to a record $6.01 billion. Total income increased 3% to a new high as record free income and treasury customer sales more than offset lower net interest income. Asset quality was resilient. Total non-performing assets were little changed from the previous quarter as new MPA formation was offset by repayments and write-offs. The MPL ratio was stable at 1.0%, while specific allowances remained below the through-the-cycle average at 16 basis points of loans for the second quarter and 15 basis points for the first half. Allowance coverage was 130% and 196% after considering collateral. Capital remained strong. The CET1 ratio was 16.6% on a transitional basis and 14.6% on a fully phased-in basis. The Board declared a total dividend of $0.81 per share for the second quarter, comprising a $0.66 ordinary dividend and a $0.15 capital return dividend. Next slide. Second quarter year-on-year performance. For the second quarter, net profit rose 9% from a year ago to a record $3.08 billion. Group net interest income declined 2% to $3.58 billion as strong loan and deposit growth together with proactive hedging mitigated the impact of lower interest rates. Fee income rose 25% or $293 million to $1.46 billion led by wealth management. Commercial Book Other Non-Interest Income grew 30% or $159 million to a new high of $681 million driven by record Treasury customer sales. Markets Trading Income strengthened 12% or $51 million to $469 million benefiting from volatile markets and lower funding costs. Expenses increased 3% or $77 million to $2.35 billion from higher staff costs. The cost-to-income ratio was 39%. Profit before allowances rose 8% to a record $3.75 billion. Total allowances fell 15% or $20 million to $113 million. Specific allowances were $188 million or 16 basis points of loans, remaining below the historical cycle average. Next slide, second quarter, quarter-on-quarter performance. Compared to the previous quarter, net profit was up 5%. Group Net Interest Income rose 2% as balance sheet growth more than offset a two basis point decline in net interest margin. Fee income eased 1% from the previous record quarter. Commercial book other non-interest income grew 13% or $79 million from higher treasury customer sales. Market trading income increased 21% or $80 million driven by equity derivatives. Expenses rose 2% of $49 million led by higher staff and revenue-related costs. Total allowances declined 41% of $77 million as general allowances were written back. The general allowance right back this quarter was mainly due to the repayment of nearly $1 billion in weaker credit exposures as well as a shift away from higher-risk consumer segments. Half-year performance For the first half, net profit rose 5% to a new high of $6.01 billion. Total income grew 3% to a record $12.0 billion. Group net interest income declined 3% to $7.08 billion as hedging and balance sheet growth cushioned the impact of lower interest rates. Fee income rose 20% of $500 million to $2.94 billion, led by record wealth management fees. Transaction services fees also reached a new high. Commercial books are the non-interest income grew 20% or $213 million to $1.28 billion, driven by higher treasury customer sales to both wealth-set management and corporate customers. Customers' trading income increased 10% or $77 million to $858 million. Expenses rose 4% or $165 million to $4.65 billion, led by high staff costs. Profit before allowances grew 3% to a record $7.39 billion. Total allowances fell 34% or $155 million, mainly due to the prudent general allowance overlay built a year ago. Specific allowances remain below the true cycle averages. Next slide, net interest income. Compared to the previous quarter, Group Net Interest Income rose 2% to $3.58 billion. Group Net Interest Income declined 2 basis points to 1.87% as interest rates were broadly stable during the quarter. The impact was more than offset by balance sheet growth. Compared to the previous year, Group Net Interest Income was 2% or $67 million lower. The average interest rates at the bottom of the slide highlight the extent of the rate decline over the past year. In particular, Singapore interest rates, represented by SORA, fell about 100 basis points year-on-year, almost halving from a year ago. Our proactive hedging strategy, as well as strong deposit and loan growth, helped mitigate a significant part of the rate headwinds. Our markets trading business also benefited from lower funding cost deposits. During the quarter, total deposits grew 1% of $7 billion in constant currency terms to $638 billion. Sing Dollar Casa inflows rose $5 billion, led by retail inflows, while fixed deposits increased $4 billion from institutional banking customers. These flows were partly offset by a $2 billion decline in foreign currency Casa as customers deployed more funds into investments. For the first half, deposits rose 4% or $26 billion, with growth across both CASA and fixed deposits. Liquidity remained healthy. The Group's liquidity coverage ratio was 142% and net stable funding ratio was 113%, both comfortably above regulatory requirements. Loans During the quarter, gross loans reached $475 billion as growth accelerated to 3% or $15 billion in constant currency terms. The increase was led by non-trade corporate loans as underlying demand remained healthy and was supplemented by higher deal activity. For the first half, gross loans grew 5% or $24 billion led by non-trade corporate lending. Fee Income growth fee income for the second quarter rose 22% from a year ago to $1.70 billion. The growth was led by wealth management fees which increased 42% to a record from higher customer investment activity and growth in AUM. Transaction service fees and investment banking fees were also higher. Compared to the previous quarter's record, growth fee income was little changed. For the first half, gross fee income rose 18% to a record $3.41 billion, led by new highs in wealth management and transaction service fees. Investment banking and cut fees also increased. Customer-driven non-interest income. Customer-driven non-interest income comprises fee income and treasury customer sales, which are reported as separate P&L lines due to accounting treatment but are both driven by customer demand for financial solutions and should be viewed together. For the second quarter, customer-driven non-interest income rose 27% from a year ago to $2.14 billion. The growth was led by wealth management, which drove a 25% in net fee income to $1.46 billion and a 33% rise in Treasury customer sales to $678 million. Institutional banking also recorded double-digit growth amid strong demand for financial solutions from financial institutions and institutional investors. For the first half, customer-driven non-interest income rose 20% to $4.21 billion, driven by new highs in both net free income and treasury customer sales. Overall, the record performance of our customer-driven non-interest income reflects the structural growth of our customer franchise in both wealth and institutional clients segments. The wealth segment. The wealth segment comprising treasures, treasures, private client and private bank has been a key growth driver. For the second quarter, total income grew 26% year-on-year to a record $1.71 billion led by a 49% increase in non-interest income amid higher customer investment activity. Wealth AUM reached a record $516 billion, up 17% year-on-year and 5% quarter-on-quarter, while net new money remained robust at $11 billion for the quarter. For the first half, wealth segment total income rose 16% to a record $3.30 billion as non-interest income increased 33%. Expenses were tightly managed with second quarter expenses only rising 3% from a year ago to $2.35 billion. The cost-to-income ratio improved to 39%. Compared to the previous quarter, expenses were up 2%. For the first half, expenses were well managed and rose 4% to $4.65 billion. Next slide, Hong Kong. Hong Kong's first half net profit rose 23% in constant currency terms from a year ago to a record $1.03 billion. Total income increased 14% to a new high of $1.95 billion. Net interest income rose 16% to $1.13 billion driven by strong deposit growth of 9% and a 15 basis point expansion in net interest margin. Fee income grew 32% to $641 million led by Wealth Management. Commercial book gardener interest income increased 12% of $13 million to $168 million driven by higher Treasury customer sales. Markets trading income declined $15 million to $48 million. Expenses rose 4% to $641 million while cost-to-income ratio improved to 33%. Total Allowances fell $22 million to $84 million. Non-Performing Assets Asset quality remained resilient. Non-Performing Assets were little changed from the previous quarter at $4.76 billion as new MPA formation remained low and was largely offset by repayments and write-offs. The MPL's ratio was stable at 1.0%. Specific Allowances Second quarter specific allowances amounted to $188 million or 16 basis points of loans, remaining below the historical cycle average. For the first half, specific allowances were $345 million or 15 basis points of loans. General Allowances General allowances of $42 million were written back for the first half due to repayments of weaker credits and lower exposure to higher risk consumer segments. As of end June, total allowance reserves stood at $6.20 billion, comprising $2.38 billion in specific allowance reserves and $3.81 billion in general allowance reserves. The general provisions overlay was stable at $2.4 billion. Allowance coverage was 130% and 196% after considering collateral. Capital The reported CET1 ratio declined 0.3 percentage points from the previous quarter to 16.6%. The movement was driven by capital return initiatives and an increase in risk-weighted assets. The pro forma ratio on a fully based-in basis decreased 2.2 percentage points to 14.6%. The leverage ratio was 5.8%, well above the regulatory minimum of 3%. Dividends The Board declared a total dividend of $0.81 per share for the second quarter, comprising an ordinary dividend of $0.66 and a capital return dividend of $0.15. Based on yesterday's closing share price and assuming that total dividends are held at $0.81 per quarter, the annualised dividend yield is 4.4%. In summary We delivered a strong set of results for the first half with total income and net profit reaching new highs. The results were anchored by continued momentum in wealth management where fees reached a new high and wealth segment AUM crossed the half trillion dollar mark. The strong performance reflects our ability to capture structural growth in wealth management and institutional flows, our proactive balance sheet management as well as robust trading performance. While the macro environment continues to evolve, our strong balance sheet, sound asset quality, prudent allowance reserves and healthy capital position provide a solid foundation for continued growth and sustainable shareholder returns. I'll now hand you over to Sushant.

Thank you, Sokhui.

Okay, so you had a lot of records from Sokhui's presentation, I think what pleased me most was the fact that we had record fees across the franchise. And it wasn't just any particular franchise. It was really a solid quarter across all the franchises, which suggests that our teams are really building new to bank customers, new to product customers, and they're really deepening and strengthening our franchise and our client relationships across the board, across segments, across countries. Whether it was record top line, record bottom line, record fees, the team is firing on all cylinders and building a strong foundation for future growth. So we also talked about the Wealth AUM. Most of you would have heard Sukun's presentation around his vision to get to a trillion. And we are really building what we call the wealth continuum and the wealth connectivity. You know, in 2016, I told my colleagues that I believe in the four Ds of wealth management. What were the four Ds then? One was digitalization. That's when the wealth was beginning to get digital. One was data, that you really have to build good data to get closer to the clients, to give them the right advice and nudges. The other D was actually democratization. We believed in the democratization of wealth very early on already. And also the last D is domestication. That means You don't just do offshore, you do onshore. You have to look after your clients both offshore and onshore. And so that's why, you know, we are deeply entrenched in our six core markets and we are deeply entrenched in building the wealth both offshore and onshore as well. And we are also focusing on building the continuum and the connectivity. So wealth management fees are up 42% year-on-year. That was very pleasing. And the AUM growth was also very decent at 17%. That was, I think, I'm seeing, we're seeing consistency there. And the teams are working very hard to continue to grow that. Even IBG also, you know, IBG, our corporate bank, saw double-digit growth in non-interest income. And that also speaks to the strength of the franchise. We had very good non-trade loans in Q2 as well. Some of it is timing. You can't synchronise perfectly, so sometimes people repay, sometimes they don't repay. They might repay more in a quarter, they might repay less in a quarter. We had some good repayments in Q2 too, from Hong Kong, some of the weaker real estate credits, they actually sold and then they repaid, so that was actually quite good. There might be some repayments in Q3, to be honest, but we had some big deals that were put through in Q2, driven by M&A, driven by Ltd Ltd Ltd Ltd Ltd Ltd Ltd of a high velocity of churn is coming through. The high velocity of transactions is coming through. Also quite pleasing, I thought the first half, we don't actually talk about this at all, so this is the first time, but institutional equity sales. We're seeing good growth in institutional equities. We're seeing good growth in equity-structured products across the franchise. And that tells us something. It tells us that Asia, the Asian capital markets Structural Growth Wealth Management Institutional Asset Management So therefore markets, our GSM team had the highest market trading income in the first half and we'll see if that continues but obviously with the volatility will come opportunities as well. And with the volatility, frankly, in the first half, our corporate treasury has been able to take those opportunities and hedge our balance sheet and be a lot more nimble. And that's also been to our advantage. And we will continue to do that when we see these volatilities going forward. And also quite pleasing is I felt that our teams really were pioneering a few firsts in the first half. We were the first Singapore headquartered bank to complete our synthetic securitization, the SRT transaction. That opens the door for us to recycle our capital and recycle our assets. We're the first, you know, to tokenize physical gold and that's seeing quite a lot of interest both in retail and institutional clients and sovereign wealth funds. And we were the first Singapore bank to be appointed RMB clearing bank. Again, we are seeing strong growth in RMB as a use for trade settlements and transactions. Next slide. So I want to unpeel some of the structural growth engines that we're seeing in our markets. The first, as I said, is wealth management. There's been a lot of figures being thrown around on how private wealth in Asia is projected. People like BCG are saying $99 trillion by 2029, etc. So you're seeing very big high numbers being bandied, but the truth is There is wealth creation, right? You know, Taiwan, with the GDP growth at 13 over percent, with the TNT sector and the hardware sector growing, you are seeing real structural growth there. So we've been laying the foundation to build a strong wealth franchise. We are also seeing very good structural growth across the board. But also, in particular, I want to talk about two countries where I think it's interesting, and that's Taiwan and India. Taiwan I talked about. It's TMT-led. It's the whole NVIDIA infrastructure. It's a supply chain across the semiconductor and data center ecosystem. And it's also affected the stock market. Taiwan's stock market is now five over trillion dollars. That's number five in the world. It's really grown. And if you look at the top six markets in the world, actually quite a few of them are in our backyard. Hong Kong, China, Taiwan. India, etc., so very good potential for us to keep growing on that. The second is India. India, in spite of some of the short-term cyclical setbacks, actually still very strong middle-income, middle-class growth, still strong GDP growth at 7.8%. I'm actually constructive on India being able to pivot to a manufacturing sector, the made in India, the PLI, which is production-linked incentives. I think that's working. So I see opportunities there. I see opportunities in renewable growth, in AI infrastructure growth. Even in wealth, the SCNR window reopened, as you saw earlier this year. It reopened, I think, last month. And we are seeing quite good flows as well. So India and Taiwan, I wanted to surface as structural growth opportunities in our core markets. Whilst, of course, Hong Kong and Singapore continue to be the two key big financial hubs that we operate out of. Then capital markets, as I said, five out of six world's largest equity markets are in Asia. Trading volume in Asia has gone up a lot. You also have potentially the 23-hour for US are now opening in Asian time as well. So we'll see a lot of volume and capital flows. So what we want to do is have the full suite of offering and as we entrench our wealth continuum, the new opportunity is not just the B2C wealth opportunity, it's also the B2B wealth opportunity as more and more players want to come in and do more. We are actually ready to service them from an institutional perspective. So that's also covered by our FIG, by our team. And so it's also B2B as well as B2C. In IBG, there are a few good structural growth. I talked about TNT and FIG. There's also TRADE. So whilst Trade outside the US, and DBS coined the term TOTUS on the 2nd of April when Liberation Day happened. We measured this. And so TOTUS, which is trade outside the US, has gone from 89% last April to 92%. What does that suggest? That suggests that trade outside the US is growing. And particularly trade in the Asian, intra-Asian regional trade is growing. And if you look at China, India, for example, China exports to India has grown from $67 billion to $136 billion. That's in the last five years and that's a doubling. Taiwan also to India has grown by 3.5 times. So you see some structural growth trends in some of these trade corridors. That's our game to win. That's really playing in our backyard. So in trade we've been facilitating both what Quijuan calls the intentional supply chain moves where people have to diversify Upstream Supply Chains, but also facilitating inventory financing, receivable financing, especially in the high-growth P&T sector right now. Payments, whether it's programmable tokenized deposits, whether it's just fiat, et cetera, that's also growing, and there's more and more demand for digital solutions. Our fake franchise spans across 15 countries, deep markets. We're seeing a lot of opportunities here to grow both our sovereign wealth fund coverage, our banks, insurance, Spintax, etc. Then AI and tokenization. So to AI, what we need to do is to really harness AI smartly. And what we've done as a bank is we build on the strong foundation that we've had in the past and continue to leverage what we have. What are our moats? Our moats are customer data, customer trust, and the culture of innovation. And so here what we're doing is we have a project to make sure that we have both structured and unstructured data in a complete end-to-end ownership, accountability, usable platform, safe platform. And here we're also coming up with personal agents, team agents, and enterprise agents to help both our own staff and our customers to do better. So an end-to-end AI infrastructure and ecosystem End-to-end data ownership and accountability and clarity and security. And also starting from every single employee being retrained, trained, reskilled, upskilled. All that's very hard work. But I think we're working on the foundation of already a very innovation-led team. So just moving forward and staying ahead and being humble and hungry and learning. So AI and tech is a big differentiator. We want to continue to harness that. So what is our 2026 outlook? As I said, we were coming on terra firma. We built a firm foundation, whether it's a fortress balance sheet, whether it's sound asset quality, whether it's healthy reserves, Good data, strong people leadership and also resilient technology and operations. We're looking to do better, hopefully. Our total income should exceed last year's figures, in spite of rates having gone down by as much as it has, especially in Singapore. Singapore rates have gone down a lot. We expect rates to remain at current levels. So that means we're not expecting a rate hike this year. The market has been expecting a rate hike, and so we will trade when we see those opportunities. But as a bank, we're not expecting any rate hikes. And we're expecting Sora to stay... US, sorry. Yeah, we're not expecting any US rate hikes this year as a bank, but we will trade around what the market expects. And Sora, we expect Sora to stay around the 1.2 or so for the average of the rest of the year. and so for the first half Group NI was down 3% but we think we can narrow the gap for the full year as rates bottom out. Deposit growth should be in the high single digit with a very good first quarter as you know. Second quarter was a bit slower because actually people were redeploying their deposits to invest, right? But we will hope to crank it up as well in the second half. Loan growth, we'll see. I mean, so far the structural growth trends are there in some of the industries that we work in, so we should be able to see some healthy loan growth as well. And we'll continue to capture whatever volatility the market gives us to hedge our book. We raised our commercial non-interest income growth to mid-teens because wealth management is really firing on all cylinders and we hope to continue. The markets will go up and down. So when the markets go down, it will slow down. When the markets go up, it will pick up. The key is you need to have a diversified time base. You need to have a continued growth time base. You need to continue to grow your net new money. You need to have the continuum and the connectivity. So that's key. Then you take the ups and downs when the market goes up or down. And also important to maintain our cost discipline. We want to keep our cost income ratio in the low 40s. So far we've been around 39-40. We want to keep that discipline. And again, keeping our strong asset quality, sound asset quality discipline. Assume SP within the range that we have guided of 17 to 20 basis points. We have a lot of GP buffered, 2.4 billion as we talked about.

Okay.

That's all for my CEO presentation.

Okay. We're happy to take questions now. Just a request. We have people watching online. So if you have a question, if you could speak into the mics you have in front of you, or if not, we have some moving mics. Just put up your hand. We will bring one to you. And also, if you could request that you do state your name and publication you represent before you ask your question. First question, please. Jessica.

Hi, I'm Rithika Subramaniam with Bloomberg News. I have a couple questions for the CEO today. Some of them are AI focused. CBS put their economic or well, what's your AI economic value target for 2026? If you could share? I know that you were aiming towards around 1 billion saying last year. and I think you've said in public too that it would be harder to isolate that number as AI embeds into workflows. So I'm curious to know what your outlook is for this year.

So we haven't, you know, it is hard to measure with both because you have deterministic classic AI, as I call it, which is the AI ML models, which is where we've come up with that 1 billion. That should continue to grow, and it is growing. Then you have the generative AI, which really saves productivity time. And then you have the agentic AI, which is when the AI starts to actually help with transactions as well. So on the generative side, what it does is it helps productivity, and it helps save time, effort, which in the end saves you money. But the time and effort that you save, you can redeploy into growth. So, there's some element of double counting there if you want to count. So, it's quite hard to count. So, we've decided at least for Generative AI, the inch-deep, mile-wide, inch-deep stuff, you know, everyone can benefit from that. So, if everyone can do more in shorter space of time, great. Then we're asking people, use that time that you save to do more, to learn more, to go up the curve, to go to a higher order job. We believe that humans can be enhanced by great AI to become super humans. But to measure that is quite hard because everyone will react differently. Everyone will increase productivity differently. It depends on attitude, aptitude, business cycles, etc. So it's quite hard to isolate. We're going to try, but I can't give you a figure because it's really hard. So you have that generative productivity saves, efficiency saves, but also better quality output part. Then you have the agentic part, which is very new, right? The agentic part, as I said, we have, you know, personal agents, we have team agents, we have enterprise agents. In the enterprise agent side, we have actually 12 big journeys that we're focusing on. And we're going to try and start measuring those 12 big journeys. We've just started the journeys, so you need to give us time. So the baseline of the classic AI, We're going to have to beat last year, of course. Then there's the additional two layers where we're going to try and figure it out. It's going to be very hard to give you a figure, but you will probably see it in our fee income line. You're already seeing it in our fee income line. You'll probably see it in our cost income ratio. You're already seeing it in our cost income ratio. And you'll see it in our productivity. And you're already seeing it in our productivity. But roles will change. Why a level 1 production engineer can become level 2 with AI tools? Then they should do more. A level 2 can become level 3. Then they will do more. Then you will see, I don't need to grow my tank headcount, but already we're doing more in tank. The same in ops, the same with RMs, the same with servicing, the same with product managers, etc. So all that takes time, but it will accrue, accrue, accrue.

Finally find a way to do this.

But I hope that it will be demonstrated in the top line and bottom line of the cost income ratio.

Speaking of wealth fees, you know, they're clearly soaring and you are hiring at least 600 RMs to chase the 1 trillion target that you have. Is AI lifting revenue per relationship manager yet or is wealth growth still fundamentally headcount led?

I will start and then I'm going to ask Sukun to chime in. So we certainly see AI already, you know, helping both our RMs, our investment counselors, our assistant RMs, and also our customers. When you log into our app, there are nudges to tell you, hey, do this, do that, have you seen this, have you seen that? So that helps the customer self-serve. Then, you know, an RM, when they come in, and you cannot, when we hire new RMs, they come in and go, wow, the DBS RM is So lucky they've got everything kind of pulled together in their workbench for them, whether it's what's missing, corporate action, things to do, suggestions to make, portfolio rejigging. We want to be able to use these AI tools, and we are, to give holistic, relevant, impactful advice to our customers. And we can serve it digitally or physically. Also, it helps the ARMs with a lot of servicing, right? We have a lot of niggly servicing to do. And by using AI, we can take away a lot of this grunt work for our assistant RMs so that they can do more value-added stuff, like talk to clients, etc.

Zuko, you want to chime in?

Yeah, just to build on what Sushant has said, which is essentially, I would say, a pretty good summary, that in the past, We'll see a lot of talk about hiring RMs to grow wealth. That is still necessary, in all fairness, because the wealth business ultimately still builds on relationship and trust, which is what we believe in. Having said that, we do believe that it is no longer just about adding people. It's about adding people while making each and every one even much more effective. And that is to be able to get every one of our investment counsellors, our RMs to be a lot more enabled so they can do things much better, much quicker. Over and above that, we're using AI across the entire end-to-end wealth proposition. How we onboard, how we advise, how we help them to execute, and then how we service. AI is going to be embedded in the entire end-to-end journey. In DBS, we have gone way beyond just throwing bodies. It's about making the bodies even more able.

Thank you. I have a couple more, sorry. With all these risks coming out of anthropic and open AI's hacking capabilities and all of those controversies that we've been reading about in the news, has that changed your usage of US LLMs in the last few months maybe? Has it changed your outlook in terms of accessing these tools?

We use all tools. Group Hldgs Ltd Ltd S&Adr The second basic is you must rely on no one. You don't have concentration risk. So you layer and you work with whoever is best in class in whatever it is that they do. And you get to know everyone. We travel east, we travel west, we meet everyone, we use everyone, we do proof of concepts with different people, different providers. We remain open-minded. but we are guarded, we are very cyber security conscious and we also guard our data and our tech stack with a lot of protection because that's sacrosanct to the customer trust. So the truth is we're open-minded and we work with everyone.

Thank you. Can I just pivot a little here and know a little bit more about some details on your Singapore outlook, you know, given the renewed war in Iraq? In Iran, sorry. And if you're expecting any slowdown in income growth in the second half here.

So Singapore GDP growth is surprised on the upside, and that's because Singapore actually has quite a lot of the semiconductor higher-end ecosystem here. Do I expect that to continue to grow? Yes. Do I expect financial services to continue to grow? Also, that's another big part of the economy? Yes. And in the capital markets, both Hong Kong and Singapore capital markets have grown.

If they both grow, that's good for us. We're in both, as you know.

So I expect to see continued structural tailwinds for Singapore. I think inflation could continue to be an issue that could be mitigated by stronger same dollar. The war on Iran will lead to volatility in things like interest rates and oil, the price of oil. So those two will be the variables that we can't predict, right? But I think we have a workforce that is preparing to be a lot more AI ready than others. I think the government has set the tone on, you know, Let's reskill and restructure and do all the right things and just face the music. And I think that's the right narrative. Don't sugarcoat it. Just look at what's ahead and let's try and restructure our workforce sooner rather than later. So I think the narrative coming out is the right one. I think we're making the investments in growth. We want to grow global champions. We want to grow Our tech ecosystem, we want to grow our data ecosystem, we want to grow our AI ecosystem. So I think all the top-down moves are right. I think we have also some good structural tailwinds in trade. I do think that the North and South trade will continue to grow and Singapore as a trade hub will tend to benefit from that as well. Thank you.

Anyone else? Maybe Toby.

I saw that the M&A activities in banking sector is quite active or hot. So can you share whether DBS plan to conduct any M&A in the mid to short term to enhance or optimize the assets? Thank you.

We look at whatever fits our three criteria. Our three criteria has always been very consistent. It must fit in with our overall strategy. It must be something we know how to integrate and operate, and the price must be right. So if the three things fit, we will look at it.

Sheila, you had a question? I'm Sheila from Straits Times. I have a question for Sushant.

DBS share price keeps going up, hitting a new high today. Do you think the valuation is too high, given that you had sold at $60 earlier in the year?

I'm not a stock analyst. I don't cover DBS stock. I'm just joking. I think You know, I think it depends on... I mean, the whole banking sector in Singapore has moved up, right? And I think it speaks to, number one, I think the potentially reallocation of investments. The people have been trading the AI stocks in the first half, and now they're maybe starting to diversify. I think SingDollar also has an element to play in that. Investors may be looking for some SingDollar diversification. I think if you're a company with both dividends, dividend yield and structural growth, then hopefully, you know, people will see that maybe you deserve some kind of premium. I don't talk about the stock as much. I will talk about the business. That's my job. You can talk to the stock analyst maybe. What I do want to say is obviously the team and I were steering DBS to really be on very strong foundation and we will continue to grow businesses that will give us good returns that are good for our customers and Luckily, we are our backyard, the high ROE businesses are growing, whether it's wealth management, it's FIG, it's PMT, it's payments, it's transaction banking, all those, it's renewable. So all those high growth businesses do give us very good ROE. So that's good. Then if you can use AI smartly to grow faster and better and to protect yourself, Then that's also good. Then you can grow without increasing your cost too much. So if you can display consistent growth and you can take the ups with the downs, because the markets will go up, the markets will go down. I hope that DBS will be the kind of company that when the chips are down, we will outperform and we will have a lower beta and a higher alpha. But when the chips are up and things are doing well, that we should outperform. So that's our hope of my team and I in the long term. Short-term, I can't predict stock price, sorry.

A couple of questions. One is, could you speak to your record treasury customer sales, because they're about 30% year on year, and they've been going up consistently. Because I think, I remember in the old days, Bush would say it's about a quarter, it's about $250 million a quarter, but now it was what? It's almost $700 million in one quarter, so what drove that? And secondly, could you also sort of give us an idea of your dividend growth? Because the reason why DBS is so attractive is because it announces absolute dividends versus the dividend payout ratio. And of course it goes into your Your Gordon growth model, right? The dividend growth, which is how you get your share price. Maybe Sushant would like to look at that a bit more closely as to what the price target could be. So just those two questions.

Thanks, Gunnar. I'll take the first one and Sokri will take the second one. So on your question on treasury sales, you're right. I mean, that's something the team and I have been working very hard on. And in a way, it demonstrates that AI is working, right? We do use AI both for idea generation and for nudging our customers and also for looking at opportunities. So that helps us generate that transaction e-flow, if you will. Number two, it's both new to bank customers and new to products. So you have to keep widening your funnel to get new clients, correct? Then you can grow your fee income. And as you widen your funnel and you get new clients, Your client comes in with one product, they can also do a second or a third or a fourth. You can start with a generic loan product. You go with an interest rate swap, a currency swap, and then an M&A, and then a syndicated loan, a project finance, blah, blah, blah. For corporate banking, for SMEs, when they do cross-border currency, we launched something called GlobeSend to counter the syntax on cross-border payments in a very easy way. So there's a lot of Transaction fees, loan fees, structured fees that you can generate in NIBG, SME, etc. In wealth, as I said, it's new to bank, it's new to product, it's AI enabled, it's self-service, all the way to highly structured stuff. So across the whole continuum for wealth, it seems to be working. So I think it's AI, human and customer all working together to generate this. There will be some cyclicality, Gula, because the markets are up, you can do a lot more. When the markets are down, you can't do as much. So there will be cyclicality in those numbers. But the key is you must keep growing your funnel and you must keep growing your AI prowess and your ability to nudge customers when they need to be nudged.

So, Gula, to your question, you're right. I think the function of our price to vote Reflects to some extent the high ROE that we have. I think the ability to pay dividends is also a function of the growth in NPAM versus the growth in our risk-weighted assets. So these are kind of like what you have to balance the growth in the business and versus what you want to pay out. And I think Sushant mentioned that we have done a securitization transaction that's also helping to right recycle our assets as well as recycle the capital. So we will continue to look at NPM growth primarily and that will determine our dividend growth.

You don't have a percentage? Depends on NPM growth.

NPM growth is a function of, I guess, market factors as well.

And do you have an internal source of cost of equity that you look at or not?

We look at what the analyst also puts into their cost of equity. So it's a number that's not observed, but we know that from the analyst estimates, it's probably in the region of 8 over to 9 over percent.

What could drive that lower?

Do you know? I think as long as we continue to run our businesses well, I think we do get credit for being sort of I think all these are the factors that will sort of help in driving the cost of XT over.

Russell, Asian Banker.

Hi, Russell from the Asian Banker. My question is for Sushant. So with free income and treasury sales of course being increasingly important contributors to earnings, With the advances of AI technology, it's getting harder to stay ahead of the curve, especially when it comes to other banks coming to the picture of AI. So do you still see the synergies of technology and people? Do you see that as being resilient enough over time to override maybe the cyclical conditions of the market? Or do you anticipate potentially having to build more revenue streams? to contact them.

So tech in itself is never a differentiator, right? Tech is widely available to everyone. What are differentiators and what are our moats? Our moats are, number one, it's our culture of innovation. That is not born overnight, right? That we've built over the last decade or so. We started our digital journey in 2013 and our data journey in 2016. So we're quite mature in doing all that. Number two is your data. Your data is another differentiator. And we spend a lot of time, effort and money to really create our data lake, to create AI ML models. All that takes years, right? And then in the way we work, we call it managing through journeys, which is a horizontal way of working. We know every single customer journey, end to end. We know the data that flows through, the systems that it flows through, the operations that it flows through. Then when you layer AI in, what part of the operations can you automate? And it's not just automating. It's also using AI end-to-end to generate ideas, to open accounts, to help with transactions, and to help with ideation. It's a whole end-to-end thing. It's not trivial. But you've got to get your basics right around technology, around your tech stack, around Realising what you want to have as sovereign and what may not be sovereign. What will you buy? What will you build? What's important to you? Whether you have sovereign codes, sovereign models, sovereign harness even, all that is here to play. We want to be very well placed in being ahead of the curve. Being ahead of the curve means you have a culture of innovation. You have a culture where you're not scared to fail. So we're trying new things all the time. Most people are building agents in DBS. We've got so many agents now. Everyone has their own personal agent. But I call it, let a thousand flowers bloom in a walled garden called DBS GPT. When we first launched DBS GPT, it wasn't very good. But today, it's very good. The tech helps. But being able to get our data right, to be able to get our journey right, to get our end-to-end You know, ownership of the data, the journey, the customer, everything, right? It's very important. It's not trivial, right? So we are lucky that, as I said, we have this culture of innovation. Even our young people, our young analysts, our young associates, they are the ones coming to me with all these great ideas. So today, a young, a junior analyst or an associate armed with AI, can be fast-tracked. As I just said, you can superhuman a young person, but it's all down to attitude. So we want to hire for attitude. And I'm glad to say a lot of people in DBS already have that innovation band. They also have a culture of resiliency around tech. We know what we cannot mess with, and that's anything to do with production systems. And so we have guardrails around that. That's why the AI harness. Group Hldgs Ltd S&Adr Group Hldgs Ltd S&Adr Group Hldgs Ltd S&Adr But we're ahead, so we are able to be nimble and we can change the way we work because we've already NTJ our customer journeys. We've already made our customer journeys horizontal. We are used to working in horizontals, not vertical silos. Can we do better? Of course we can, but we will use AI to do better. So if you ask me, you know, will other banks catch up? Of course other banks will catch up, but will we keep staying ahead? Yes, I want us to stay ahead, right? And those moats take years to build.

We have time maybe for one last question.

Thank you and congratulations on your results. My question is on China's new offshore trust tax rules. With wealth management a key growth driver for TVS, do you expect any impact on the bank? and if you've seen any change in client behavior among Greater China Private Banking clients or do you see any opportunity for the bank? Thank you.

So you remember what I said about the four Ds of wealth management and one of the Ds is domestication, right? I think the trend is coming. and we're ready for it. Which means that you need to provide strong domestic wealth management solutions for clients, whether it's in China, India, Indonesia, Taiwan, Singapore, Hong Kong also, right? So being there domestically is a key driver for us. And Zukun already mentioned, he's building all these wealth centres, how many? 18. Yeah. Right? So all our wealth centres are spread across our you know, high growth areas including China, including Indonesia, including Taiwan, etc. So, the regulations that are coming out, there are three, well, there's two that are official. One is the 837 Directive around the outbound trusts and one is the announcement 21, sorry, one is the 837 Directive around outbound investments, not in trusts, which I think is more, has affected some of the So the third one that was in the news today, we haven't seen any official announcement. So we have to wait to see whether there's any official announcement that's coming out. So there is nothing conclusive yet. And so my short answer is, we play by the rules. We are regulated bank. We have common reporting standards. and we have declarations when you have declarations. So in a way, this evens out the playing field. Because in the past, I think some fintechs and all that, they do things faster, better, because maybe they were not quite as regulated as banks were. Today, that evens out the playing field. Not a bad thing in the long term. And as I said, we're not going to circumvent any of the regulatory hurdles, so we will play by the rules. and we are already onshore, we will continue to grow onshore. So if money stays onshore, we're quite happy, frankly, because we want to build that.

Okay, just a follow-up. from Bloomberg. When you talk about domestication in response to China flows, are you saying that... No, no, I was saying that as a broad wealth management trend, and I've been saying that since 2016.

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