DBS (Development Bank of Singapore)

[jfc18]

During the depths of GFC2008 ~15years ago, DBS raised new capital via deeply discounted rights from a "position of strength". It has now come full circle as they start a SBB which cancels shares, noticeably after a 10% bonus issue just <1year ago, and also from "a position of strength".
This sort of signaling and capital allocation is generally unseen or rare in the local market I suppose.
Trading Update for the Third Quarter Ended 30 September 2024
Third-quarter net profit rises 15% to surpass SGD 3 billion for first time
Nine-month net profit up 11% to record SGD 8.79 billion, return on equity at 18.8%
Board announces new SGD 3 billion share buyback programme
The cost-income ratio was 39%.
Asset quality continued to be resilient, with the NPL ratio declining to 1.0%. Non-performing
assets fell 8% from the previous quarter. Specific allowances were at 14 basis points of loans for
the third quarter and 11 basis points for the nine months.
3Q24:
https://links.sgx.com/FileOpen/3Q24_trad...eID=824289

Hi weijian,

The SSB is just another tool in the kit box to return excess capital to shareholders. It is more like a PR wayang move to demonstrate "Yes, I got the money". Insti loves SSB. Hard to see DBS buying back shares at 1.2x book or higher. It does not create value for shareholders. Most probably it would only buy back a little during mini crashes to calm market nerves. For eg, the one day drop of -5% during August this year.

Temasek owns 29% of DBS. At most, DBS can only utilise this $3bn buy back prog plus another $2-3bn tranche to avoid crossing 30% ceiling limit for Temasek. Singapore law does not allow any entity, Temasek included, to own more than 30% in any one of our three local banks. Henceforth, the buy back bullets are limited. If DBS fire off, they got to make it count.

---------------------------------

https://companiesmarketcap.com/sgd/banks...arket-cap/

By market cap, DBS is now 23rd largest bank in the world. It is an astonishing feat for a relatively young bank from a tiny island of 6m population. The top nine are all from US and China. Top 10 to 22 are also mostly banks which have huge local population to serve. 

Only UBS at 19th position has similar local population size as DBS. However, UBS has a storied history of 160 years. But hey, DBS market cap of US$90bn is not far off from UBS US$100bn.

Looking at the 22 banks ranked above DBS, only Al Rajhi Bank, has a higher ROE of 19% than DBS' 18%. This is somewhat an unfair comparison as Al Rajhi Bank is funded by Saudi's massive cheap oil money. Taking Al Rajhi Bank out of the equation, DBS ROE is the highest among the world's largest 20 banks.

No huge population. No natural resources. No long history. Just a world class bank run by best in class management. Singaporeans should zoom out and recognise a homegrown global champion in DBS.