DBS Bank posted their 3Q FY 2016 earning report in summary
below. It was a resilient 3Q operating performance underpinned by income growth and cost containment. These strong operating results provide substantial headroom for higher allowances to be taken as prudent measure.
- Net Profit increase 2% to $1.071 billion
- Total Income stable on quarter to $2.93 billion
- Expenses decline 7% on quarter to $1.2 billion
- Profit before allowances increase 6% on quarter to $1.73 billion
The marginally increase of 2% net profit was due to an increase in general and specific allowances. Profit before allowances increase 19% y-o-y led by higher contributions from wealth management and investment banking. The asset quality continued to be sound. Non-Performing Loan (NPL) rate rose moderately to 1.3%. Allowance coverage was at 100% and 204% with collateral. Total allowances more than doubled to $169 million, which were taken as a prudent measure. The strong balance sheet is sufficient to weather further NPL increases. The exposure of Oil & Gas sector has come off to $3 billion from the previous quarter of $20 billion. Exposure in Commodity sector has also come off to $14 billion. DBS Bank is very well positioned for challenges ahead.
Today, DBS also announced that they are acquiring the wealth management and retail banking business of Australia and New Zealand (ANZ) Bank in Singapore, Hong Kong, China, Taiwan and Indonesia for $110 million above book value. This acquisition is expected to add $23 billion to its wealth Assets Under Management (AUM), bringing the total to $182 billion.
Over the years, DBS had consistently proven their ability to successfully integrate multiples wealth and retail acquisitions and partnerships across the region. This acquisition makes good strategic sense to cement their position as a leading wealth manager in the region.
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