Wednesday, February 7, 2024

DBS FY2023 Earning Result

DBS Group ("DBS") reported their FY2023 earning result this morning [here].  Here is a quick dive into the numbers:

Numbers in S$ million unless stated otherwise.
Full Year Ending 31 Dec 2023 31 Dec 2022 % Change
Total Income 20,180 16,502 22.3
Profit Before Tax 11,739 9,382 25.1
Net Profit 10,286 8,193 25.5
EPS (S$) 3.87 3.15 22.8
Net Book Value (S$) 23.14 21.17 9.30

FY23 net interest margin (NIM) is 2.15% (FY22: 1.75%).  Return on equity is 18.0% (FY22: 15.0%).  Non-performing loan (NPL) ratio is constant at 1.1% (FY22: 1.1%).  Compared to the first half, 2H2023 net profit fell 4%.  Total income increased 2% due to the consolidation of Citi Taiwan.  Excluding Citi Taiwan, total income was maintained at the previous half's record, as a higher NIM offset the impact of seasonally lower non-interest income in 4Q2023.

DBS maintained guidance for 2024 net interest income to be around 2023 levels, supported by consolidation of Citi Taiwan and trade-off between NIM and loan growth.  2024 NIM is expected to be slightly below 2023 exit NIM of 2.13%.  2024 fee income growth is expected to be double-digit, supported by Citi Taiwan's wealth management inflows as well as card income.

DBS declared a final dividend of 54 cents per share (2022: 42 cents), Ex Date is 5 Apr 2024, Pay Date is 19 Apr 2024.  The bank also announced a bonus issue on the basis of one bonus share for every existing 10 DBS ordinary shares held.   The bonus shares will only qualify for 1H2024 interim dividend onwards.  Nonetheless, the bank is confident of maintaining a dividend at $2.16 per share over the enlarged share base.

My Thoughts
Contrary to analysts' expectations, DBS did NOT announce a special dividend this year.  On the other hand, the bank announced a 1-for-10 stock dividend.  This comes as a pleasant surprise.  DBS is confident of 24% growth in FY2024 DPS, signifying a dividend yield of 7.5% based on last close price of $31.65.

I will await more details of the bonus issue.  At current valuation, DBS is suitably attractive.  But due to the high share price, I will have to budget my capital carefully for any new purchase.

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