Singapore Earnings Update:

DBS Group:

  • 4Q earnings up 33% to S$1.22 billion, total income up 10% to S$3.06 billion
  • Net interest income jumped to S$2 billion backed by loan growth and higher Net Interest Margin (NIM)
  • Total allowance halved to S$225 million as residual weak oil & gas exposure have slowed down substantially
  • Non-performing loan (NPL) ratio stable at 1.7%
  • Full year ordinary dividend increases 55% to S$ 93 cents, special dividend of 50 cents
  • Share price jumped 4.8% to S$26.60 at open

Singtel:

  • Net profit down 9% to S$890 million mainly due to drop in associates’ earnings and higher network depreciation and amortisation
  • Declining voice revenue and increased infrastructure investment also impacted earnings
  • Operating revenue up 4%, EBITDA up 6% to S$1.29 billion, underpinned by strong core and digital business
  • Despite of current headwinds, the management remains confident about regional’s associates’ future growth

As volatility in the stock market started to settle down, investors could finally shift their focus to corporate earnings. This morning, two of Singapore’s largest listed companies – DBS Group and Singtel announced their fourth quarter results, which are mixed.

DBS smashed market expectation from the upside again with strong 33% yoy earnings growth, driven by strong Net Interest Income (NIM) amid rising lending rates. Its allowance halved in the fourth quarter, as the bulk part of the sour loan has been dealt in the previous quarter and the residual weak oil & gas exposure has slow down significantly. DBS generously lifted its ordinary dividend per share by 55% to S$ 93 cents, plus a special dividend of S$ 50 cents. This will significantly lift the company’s dividend yield and make it attractive to value investors again.

Singtel, however, suffered from lower profit due to lower contribution from its overseas associates’ earnings and higher infrastructure spending cum higher depreciation costs. Singtel’s share price has largely underperformed the benchmark index over the past 12 months so the downside is cushioned by cheap valuation and a stable dividend. Its share price slightly changed after earnings announcement.

DBS Group

 

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.