DBS' Fourth-Quarter Net Profit Surges 10% on Higher Interest Income and Fee Income

DBS Group, Singapore's largest bank by assets, reported a 10% increase in fourth-quarter net profit compared to the previous year, driven by higher interest income and fee income. The bank's net profit for the quarter ended December 31, 2022, reached SGD 2.34 billion, up from SGD 2.11 billion in the same period last year. This strong performance was reflected in the bank's share price, which rose by 1.5% to SGD 30.50 on the news.



The bank's net interest income (NII) rose 14% from the previous quarter to SGD 3.40 billion, bolstered by higher interest rates. The net interest margin (NIM) increased by 31 basis points to 2.61% as asset repricing from higher interest rates more than offset increases in deposit costs. This trend is likely to be sustainable as long as interest rates remain elevated.

Fee income increased 17% to SGD 741 million, led by a 31% increase in wealth management fees due to buoyant investor sentiment. A significant number of transactions also led to a near tripling of investment banking fees. This trend may continue, given the positive outlook for the wealth management and investment banking sectors.

Other non-interest income rose 5% to SGD 294 million from higher gains on investment securities. This trend could be sustainable, given the potential for continued growth in investment income.



DBS' loan growth in the fourth quarter is expected to have stayed soft, as indicated by CGS International analysts. They anticipate that full-year loan growth will be in line with the bank's guided low-single-digit range. This suggests that corporate demand for loans remained sluggish during the quarter, which may have contributed to the overall slowdown in loan growth.

Under the new leadership of Tan Su Shan, who will succeed Piyush Gupta as CEO in March, DBS is expected to explore new growth initiatives in countries such as Malaysia and Indonesia. This strategic expansion is likely to be driven by the bank's strong financial position and excess capital, which may enable it to invest in these markets without pursuing transformative acquisitions in the medium term. By expanding its presence in these regions, DBS aims to tap into new revenue streams and diversify its income sources, ultimately contributing to its future performance and growth.

In conclusion, DBS' fourth-quarter net profit rise of 10% on the year was driven by higher interest income and fee income, reflecting the bank's strong performance in the wealth management and investment banking sectors. The bank's strategic expansion into new markets under its new leadership is expected to further boost its future growth and performance.