Singapore's DBS maintains 2024 guidance, Q4 profit beats forecasts

DBS Group, Singapore's biggest bank, maintained guidance for net interest income for 2024 at around last year's levels after posting a 2 per cent rise in fourth-quarter net profit, beating expectations. "While interest rates are expected to soften and geopolitical tensions persist, our franchise strengths will put us in good stead to sustain our performance in the coming year," DBS Chief Executive Officer Piyush Gupta said in a statement.

Besides maintaining net interest income at around 2023 levels, Gupta expected return on equity (ROE) to be 15 per cent to 17 per cent for this year and fee income growth at double-digit, according to slides accompanying his results. Full-year net interest margin (NIM), a key profitability gauge, is expected to be slightly below the fourth quarter NIM of 2.13 per cent. Singapore's banks, the largest in Southeast Asia, are set to post higher profits for the fourth quarter because of higher interest rates, though growth momentum is poised to slow as central banks pivot toward rate cuts and volatile markets weigh on the wealth business.

DBS, the first Singapore lender to report this earnings season, said October-December net profit grew to S$2.39 billion ($1.78 billion) from S$2.34 billion a year earlier on the back of a 9 per cent increase in total income. This beat the mean estimate of S$2.37 billion from four analysts, according to LSEG data. DBS, which is also Southeast Asia's biggest bank, proposed a final dividend of 54 cents per share and a 1-for-10 bonus issue.

The NIM of 2.13 per cent during the quarter was up from 2.05 per cent a year earlier. Full-year annual profit jumped 26 per cent to S$10.3 billion from S$8.19 billion in 2022. Return on equity climbed to a record high of 18 per cent from 15 per cent a year ago. Nevertheless, the variable compensation for its CEO and other members of its group management committee was collectively reduced by 21 per cent from the previous year despite record 2023 profits to account for a series of digital disruptions during the year. Gupta took a deeper cut of 30 per cent, which amounted to S$4.14 million, according to DBS' statement.