DBS Group Holdings has beaten market expectations with a strong fourth-quarter showing but the sparkling bottom line did not halt the slide in its share price.
South-east Asia's largest bank said it will ease the rate of hiring markedly and slow wage rises, especially at senior levels.
Net profit soared 20 per cent to $1 billion for the three months ended Dec 31, as business performance improved across the board, and credit quality risks from exposure to struggling sectors were manageable.
AT A GLANCE
REVENUE: $2.65 billion (+13%)
NET PROFIT: $1 billion (+20%)
FINAL DIVIDEND: 30 cents
The result comfortably surpassed the $965 million average estimate of analysts polled by Bloomberg.
Revenue shot up 13 per cent to $2.65 billion, pushing 2015's figure to $10.79 billion, crossing the $10 billion mark for the first time. Full-year net profit rose 10 per cent to a record $4.45 billion.
Earnings per share for the quarter was $1.57, up from $1.32 in 2014, while net book value was $15.82 per share as at Dec 31, up from $14.85.
The fourth-quarter earnings were lifted by stronger net interest income, which grew 11 per cent to $1.85 billion as net interest margin rose to 1.84 per cent - the highest in five years - despite a moderate loan growth of 3 per cent.
The non-performing loans (NPL) ratio was 0.9 per cent, unchanged from a year earlier, but non-performing assets (NPA) rose 11.1 per cent to $2.79 billion as at Dec 31.
The quarter's new NPA came mainly from a fishery account in Hong Kong and an offshore marine firm here, chief executive Piyush Gupta told a briefing yesterday.
He added that the bank's oil and gas exposure was about $22 billion as at December, of which $17 billion was loan exposure, with stress only on the support services segment.
"The support services portfolio is $9 billion, and the NPL in that component is 1.3 per cent," he said.
This means DBS' oil and gas NPL was around $117 million. China-related loan exposure was $37 billion across state-owned firms, he added, and the NPL ratio was around 0.6 per cent or $220 million.
A stress test showed that even if the oil price dips to US$20 per barrel and stayed at that level into 2018, DBS' provisions for the oil and gas sector are still unlikely to go beyond $200 million. Brent crude is now about US$34 a barrel.
DBS is not expecting any additional special oil and gas provisions this year, he said.
Non-interest income for the quarter jumped 19 per cent year-on-year to $795 million, with fee income rising 6 per cent to $485 million.
Amid the difficult business environment that has forced several global banks to cut jobs here, DBS will slow down on its hiring and wage increment to manage cost.
The board recommended a final dividend of 30 cents a share, unchanged from last year.
DBS shares closed six cents or 0.44 per cent lower at $13.62, following the results release. The counter has shed 18 per cent this year while the benchmark Straits Times Index is down around 8 per cent.
SEE BUSINESS: Banks' solid results soothe concerns