DBS markets trading income hits 2.5-year high, boosted by EQD

DBS Group Holdings has posted robust earnings for the third quarter with net profit up 15% year-on-year (YoY) to SG$3 trillion (US$2.26 trillion). Total income rose 11% from a year ago to SG$5.75 billion.

We achieved another record performance in the third quarter - Piyush Gupta, CEO

The increases were boosted by balance sheet growth, record fee income led by wealth management, higher treasury customer sales, and strong markets trading income, Singapore’s largest bank said in its Q3 2024 earnings report.

The bank’s wealth management income reached SG$609m in the three months ended September, soaring 55% compared to last year’s same time. The bank attributed the surge to growth in investment products across the broad and bancassurance from stronger investor sentiment.

Markets trading income doubled YoY, reaching SG$331m – the highest in 10 quarters – as FX, interest rate and equity derivative activities benefited from market volatility, the bank noted.

‘We achieved another record performance in the third quarter [...] commercial book net interest margin was supported by reduced interest rate sensitivity of our balance sheet, while wealth management drove fee income to a new high as a benign macroeconomic and interest rate outlook buoyed investor confidence,’ stated CEO Piyush Gupta (pictured), who will step down from his position next March, to be succeeded by Tan Su Shan, the current deputy CEO.

The latest earnings reveal also saw the DBS board announce a new SG$3 billion share buyback programme. Shares of DBS closed at an all-time high of SG$42.4 last Friday before slightly retreating intraday on Monday (11 Nov).

Structured product issuance maintains strong in Taiwan

DBS Bank has also been active in structured product issuance in Asia. In Q3 2024, it continued to be the largest structured note issuer by number of product issuance In Taiwan as it manufactured more than 2,800 tranches, mostly constructed in a basket of stocks format and distributed in-house, according to SRP data.

DBS leads as the largest structured note issuer in Taiwan by issuance in Q3 2024

 

_{Source: SRP}

The latest issuance amount also rose compared to the prior-year quarter when there were more than 2,100 structured notes issued by the bank.

The semiconductor sector overtook the tech sector to the underlying exposure’s heavyweight for these structured notes in Q3 2024, led by shares of US chipmaker Advanced Micro Devices (AMD), which have seen related 883 products and Taiwan Semiconductor (TSMC), which has seen 793 products, respectively.

The Tesla stock, which was the most-used underlying stock in the prior-year quarter, ranked in fourth place with 609-related product issuance.

Pfizer emerged as one of the frontrunners in the underlying league table, with 703 products tracking the US pharmaceutical stock in Q3, versus just five products in the equivalent quarter last year.

DBS Bank: top 10 most used underlyings in structured notes issued in Q3 2024 in Taiwan

 

_{Source: SRP}

All of the bank’s structured notes registered on the SRP database are non-principal protected, with the majority featuring autocallable worst-of-option payoff structures. Roughly 60% of the products have a knock-in barrier.

Among all issuances in Q3 2024, the tenors are split into two camps: nearly 1,500 tranches have a tenor between one to three years, while the rest have a tenor of less than one year, similar to Q3 2023.

Meanwhile, more hybrid and ETF-linked products issued by DBS Bank have surfaced in the Taiwanese market compared to the prior year. In the third quarter, the bank issued 70 hybrid products comprising stock and ETF underlying exposures focusing on tech and semiconductor sectors, such as the VanEck Vectors Semiconductor ETF seen in 50 hybrid products. There were also 16 commodities-linked and 13 ETF-linked structured notes manufactured by the bank in Q3.

DBS Bank also distributed 23 BNP Paribas-issued structured notes in Taiwan – mostly interest rate-linked callable notes. The bank further marketed six structured notes issued by Société Générale and five issued by Morgan Stanley in the period.

In addition to Taiwan, SRP database also recorded 20 wealth management schemes issued by DBS Bank in China in Q3 2024, driven by FX rates products like the AUD/USD pair (four products).

The latest structured product activity came after the bank announced to offer Bitcoin and Ethereum spot-linked structured notes and cryptocurrency ETF-linked structured notes starting from the fourth quarter of the year, targeting eligible institutional investors and accredited wealth clients within DBS Private Bank and DBS Treasures Private Client in Singapore.

Click the link to read the full copies of DBS Group Holdings’ third-quarter 2024 trading update and CFO presentation.

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