SINGAPORE - DBS Group Holdings will pay S$1.20 per share in dividends from 2018 onwards - double its payout in three of the past four years, the bank said on Thursday (Feb 8).
The news came as DBS said that earnings reached a record high of S$1.19 billion for the fourth quarter, up 31 per cent from the previous year.
Its total income grew 10 per cent to S$3.06 billion, marking the second straight quarter that it has stayed above the S$3 billion level, as net interest income rose 15 per cent to S$2.1 billion in line with higher Singapore-dollar interest rates.
Excluding one-time items - mainly from integration costs of ANZ's wealth management and retail banking business - net profit would have grown 33 per cent to S$1.22 billion.
The bank is proposing a final dividend of 60 Singapore cents a share for 2017 - double that of last year - and also a special dividend of 50 Singapore cents a share, as a one-time return of capital buffers that had been built up and to mark the bank's 50th anniversary. These will be made on May 15.
In addition to an interim dividend of 33 Singapore cents per share that was already paid out, the full-year payout for 2017 will be 93 Singapore cents per share, 55 per cent more than the 60 Singapore cents per share paid in 2016.
The bank said it will give a full-year dividend of S$1.20 going forward.
DBS explained that the higher dividend policy was a result of finalisation of Basel capital reforms, which provided clarity on future regulatory requirements."They have a benign impact on DBS, enabling its capital requirements to be rationalised," it said.
The board has therefore suspended the scrip dividend with immediate effect, and determined that ordinary dividends can be sustained at higher levels and increased over time with earnings growth.
DBS chief executive Piyush Gupta told reporters that the bank has returned to being a fairly high yield dividend stock.
The positive results attest to the quality of the bank's multiple business engines and the nimbleness of its execution, he said in a statement.
"We enter the coming year with sustained momentum across our businesses and, more fundamentally, in our digital transformation," he said. "The significant increase in dividends reflects the quality of our earnings, the strength of our balance sheet and the improved returns we are generating for shareholders."
Chief financial officer Chng Sok Hui said that as of Wednesday, the yield for DBS's stock is about 4.5 per cent.
For the fourth quarter, the bank halved its amount of total allowances to S$225 million, saying that residual weak oil and gas support service exposures have been dealt with in the previous quarter.
Its non-performing loan rate was unchanged at 1.7 per cent from the previous quarter.
Mr Gupta told reporters in a briefing that he sees the deep exploration sector to be structurally impaired, and that it is unlikely oil prices will hit US$80 a barrel.
But the bank will not exit the oil and gas space, and remains actively participating in restructuring, he added.
For the full year, DBS recorded a 3 per cent growth in net profit including one-time items to S$4.37 billion.
This was a new high from broad-based loan growth and record fee income, which more than offset the impact of softer interest rates and weaker trading income, it said.
Excluding one-time items, net profit would have risen 4 per cent to S$4.39 billion.