DBS (Development Bank of Singapore)

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DBS - We would like to clarify that DBS' plans for a digital exchange are still work in process, and have not received regulatory approvals. Until such time as approvals are in place, no further announcements will be made.
https://links.sgx.com/1.0.0/corporate-an...b9aa6a1952

Stay home and stay safe, everyone.

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Piyush Gupta, Group CEO, DBS, said, “The exponential pace of asset digitalisation provides immense opportunities to reshape capital markets. For Singapore to become even more competitive as a global financial hub, we have to prepare ourselves to welcome the mainstream adoption of digital assets and currency trading. DBS is committed to accelerating the development of a fully integrated ecosystem to facilitate this. We believe that this is the first of its kind integrated offering, which is differentiated in many ways.” 

Setting the DBS Digital Exchange apart 
The DBS Digital Exchange is a members-only exchange for Institutional Investors and Accredited Investors.
https://links.sgx.com/FileOpen/DBS%20Dig...eID=641963

Stay home and stay safe, everyone.

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DBS $36.45


https://finance.yahoo.com/news/largest-b...37257.html

DBS Bank CEO Piyush Gupta during the bank's fourth-quarter earnings call Monday said there is a roadmap in place though declined to give further specifics.

"We've started doing the work on seeing how we get in a sensible way, take it out, and expand it beyond the current investor base. And that includes making sure we appropriate thinking about things like potential fraud and others," Gupta said during the call. "We should have something by the end of the year."


Stay safe and stay healthy, everyone.

[weijian]

Normally, bonus issues on the local bourse are for the smaller caps to increase "outstanding share count and eventually shareholder base". So, it is quite rare for a component bank in the STI Index to do a bonus issue.

DBS says that the bonus issue will "increase the pace of capital returns to shareholders". But a bonus issue will actually increase the share capital, at the expense of retained earnings. Cash dividends are mainly paid out of retained earnings. To accelerate capital returns to shareholders, isn't the mathematically correct way be (1) share buyback to reduce share capital, (2) increase dividends to deplete the retained earnings?

DBS Q4 profit falls 3% to S$2.27 billion; proposes S$0.54 per share dividend, 1-for-10 bonus issue

In addition, DBS proposed a bonus issue on the basis of one bonus share for every existing 10 ordinary shares held.

“The bonus shares will qualify for dividends starting with the first-quarter 2024 interim dividend and will increase the pace of capital returns to shareholders,” said the lender. It added that the annualised ordinary dividend going forward will be S$2.16 per share over the enlarged share base, 24 per cent higher than the S$1.92 per share for FY2023.

https://www.businesstimes.com.sg/compani...onus-issue

[egghead]

I suppose the idea is to enlarge the base, in this case by 10%, so that subsequent effort will be accelerated by 10%. Doing a one-off large special dividend will do but I suspect the result of a one-off bump in the share price may not be quite as desirable for DBS?

[weijian]

I suppose the idea is to enlarge the base, in this case by 10%, so that subsequent effort will be accelerated by 10%.  Doing a one-off large special dividend will do but I suspect the result of a one-off bump in the share price may not be quite as desirable for DBS?

An alternate to enlarge base so that subsequent effort will be accelerated by 10%, the BOD could  bump up the dividend by 10% to achieve the same effect. I believe DBS is 1 of those that does a quarterly "fixed" dividend.

Of course, both moves -  either enlarge base OR bump up fixed dividend - achieve similar capital returns to shareholders. The only difference I see is the different accounting on the share capital/reserves as I mentioned earlier. That is why is puzzling me.

I reckon I am probably overthinking on this! Regardless on the matter of capital returns, DBS is making the right moves to return them.

[ghchua]

An alternate to enlarge base so that subsequent effort will be accelerated by 10%, the BOD could  bump up the dividend by 10% to achieve the same effect. I believe DBS is 1 of those that does a quarterly "fixed" dividend.

Hi weijian,

Actually, DBS is doing both. Enlarge base with bonus issue and bump up fixed dividend with higher quarterly dividend of 54 cents, up from 42 cents a year ago and 48 cents a quarter ago. And also with a 1 for 10 bonus share issue which will also be entitled to 1Q’24 quarterly dividend payment of 54 cents/share.

[weijian]

hi ghchua,

Thanks for the clarification as I haven't really dwelled into DBS's dividend history.

In this case, why wouldn't DBS decide on a "60cents/share" dividend (with no 1-for-10 bonus), compared to the current action of 54cents/share on 1-for-10 bonus for 1Q24?

[weijian]

I suppose the idea is to enlarge the base, in this case by 10%, so that subsequent effort will be accelerated by 10%.  Doing a one-off large special dividend will do but I suspect the result of a one-off bump in the share price may not be quite as desirable for DBS?

An alternate to enlarge base so that subsequent effort will be accelerated by 10%, the BOD could  bump up the dividend by 10% to achieve the same effect. I believe DBS is 1 of those that does a quarterly "fixed" dividend.

Of course, both moves -  either enlarge base OR bump up fixed dividend - achieve similar capital returns to shareholders. The only difference I see is the different accounting on the share capital/reserves as I mentioned earlier. That is why is puzzling me.

I reckon I am probably overthinking on this! Regardless on the matter of capital returns, DBS is making the right moves to return them.

So, accounting convention doesn't really matter here (share capital, retained earnings, reserve etc). What really matters is the CET1 ratio defined by DBS's regulator and it is encouraging to see an emphasis on "returning the excess capital" to shareholders. They probably deserve the almost 40-50% premium over BV I reckon with their mid teens ROE returns.

I reckon delighting your shareholders mean both a bonus and higher dividends. A bonus probably work wonders, especially minorities because we can easily see the total no. of shares we own, but not the % holding or total no. of shares. The folks at Prime US REIT had also used the same tactic to cushion their 90% dividend cut.

RESPONSES TO SUBSTANTIAL AND RELEVANT QUESTIONS RECEIVED FROM DBSH SHAREHOLDERS IN RELATION TO DBSH’S 25th ANNUAL GENERAL MEETING

We are maintaining the nominal dividend at 54 cents per share after the 1- for-10 bonus issue. This signals our commitment to accelerating capital returns to shareholders by permanently raising the ordinary dividend and annual baseline increment by 10%, which amounts to SGD 3 billion over the next five years. The higher dividends can be priced into long-term shareholder returns.

We can increase the pace of capital returns to shareholders given the structurally higher profitability of our franchise and the strong capital buffers we have built. Our current CET 1 ratio of 14.6% is 1.6%pts above the midpoint of our target range of 12.5-13.5%, implying excess capital of SGD 5.9 billion or around SGD 2.00 per share post bonus issue (computed based on the number of issued ordinary shares, excluding treasury shares, as at end 2023). This number may increase post-Basel III reforms effective 1 July 2024.

The bonus issue does not rule out the potential for us to return capital through other forms such as special dividends, share buybacks or higher ordinary dividends, and the board will evaluate the options every quarter.

https://links.sgx.com/FileOpen/DBS%20Res...eID=793670

[ghchua]

So, accounting convention doesn't really matter here (share capital, retained earnings, reserve etc). What really matters is the CET1 ratio defined by DBS's regulator and it is encouraging to see an emphasis on "returning the excess capital" to shareholders. They probably deserve the almost 40-50% premium over BV I reckon with their mid teens ROE returns.

Hi weijian,

By returning excess capital over the next few years, it also increases ROE since there are less excess capital in the company. Also, by making acquisitions, it also pump up the earnings profile if things are integrated well into the company.

But all these did not hide the fact that the lending environment had becomes tougher. NIM will probably remain flat or come down a bit going forward. Bad loans might be an issue, if the economy slows down further. The focus is on driving those higher ROE non interest income businesses, but investors will be expecting more if the share continues to trade at a higher premium to book value.

I will be very excited if they say that they will be increasing their profits by say, 10%pa for the next 5 years, rather than maintaining mid teens ROE.