DBS to raise dividends to $1.20 a share

Earnings hit record $1.19b for fourth quarter, up 31%

DBS is proposing a final dividend of 60 cents a share for 2017 - double that of last year - and also a special dividend of 50 cents a share, as a one-time return of capital buffers that had been built up, as well as to mark its 50th anniversary.
DBS is proposing a final dividend of 60 cents a share for 2017 - double that of last year - and also a special dividend of 50 cents a share, as a one-time return of capital buffers that had been built up, as well as to mark its 50th anniversary.PHOTO: LIN ZHAOWEI FOR THE STRAITS TIMES

DBS Group Holdings will pay $1.20 per share in annual dividends from 2018 onwards - double the payout in three of the past four years, the bank said yesterday.

Its commitment to raising its dividends, a one-time payment of a special dividend as well as record earnings sent the stock soaring 5.3 per cent to $26.71 yesterday.

DBS said its earnings reached a record high of $1.19 billion for the fourth quarter, up 31 per cent from the previous year.

Total income grew 10 per cent to $3.06 billion, marking the second straight quarter that it has stayed above the $3 billion level, as net interest income rose 15 per cent to $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 $1.22 billion.

The bank is proposing a final dividend of 60 cents a share for 2017 - double that of last year - and also a special dividend of 50 cents a share, as a one-time return of capital buffers that had been built up, as well as to mark the bank's 50th anniversary. These payments will be made on May 15.

Including an interim dividend of 33 cents a share paid earlier, the full-year payout (less the special dividend) for 2017 will be 93 cents per share, 55 per cent more than the 60 cents declared for 2016.

It gets even better as DBS will up its full-year dividends to $1.20 a share going forward.

  • AT A GLANCE

  • TOTAL INCOME: $11.9 billion (+4%)

  • NET PROFIT: $4.37 billion (+3%)

  • TOTAL DIVIDENDS PER SHARE: $1.43 (+138%)

DBS explained that the higher dividend policy was a result of a finalisation of Basel capital reforms, which provide clarity on future regulatory requirements.

"They have a benign impact on DBS, enabling its capital requirements to be rationalised," the bank 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.

"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," he said.

Chief financial officer Chng Sok Hui said that as of Wednesday, the yield for DBS' stock is about 4.5 per cent.

For the fourth quarter, the bank halved its amount of total allowances to $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 $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 $4.39 billion.

Total income rose 4 per cent to a record $11.9 billion.

A version of this article appeared in the print edition of The Straits Times on February 09, 2018, with the headline 'DBS to raise dividends to $1.20 a share'. Subscribe