The lower treasury markets trading income in H1 reported by the largest bank in Singapore was curbed by higher net interest rates, according to CEO Piyush Gupta.

DBS Group has posted robust earnings for the first half of 2023, with net profit soaring 45% year-on-year (YoY) to SG$5.26 billion (US$3.86 billion). Total income jumped up 34% YoY to SG$10 billion compared with the prior-year period, according to its latest earnings reports.

The bank’s higher commercial book net interest margin (NIM), card fees, and treasury customer income buoyed its lower treasury markets trading income, which tumbled 36% YoY to SG$446m during the first six months of the year.

The sharp drop in trading income from treasury markets – primarily comprising structuring, market-making, and trading across a range of treasury products – came after a ‘high year-ago base in the first quarter and the impact of higher funding costs,’ stated the bank.

In the structured products space, DBS Bank marketed 4,790 products across the Asia Pacific (Apac) region year-to-date, doubling from last year's period that recorded 2,170 products and placing it the third-largest issuer in the area, according to SRP data.

The Singapore-based bank is active in Taiwan, with some 4,767 products issued this year so far, more than double last year’s same period (2,146 products). The bank mostly issued notes with autocallable payoffs and tied to a basket of equity shares such as Tesla, Advanced Micro Devices, and NVIDIA.

DBS Bank also maintained its engagement in the Chinese market, seeing 23 products issued this year so far, which were all categorised in the wealth management scheme.

Earlier this year, the bank promoted Jeremy Kok (right) to head of treasury & markets, Hong Kong to oversee all aspects of the division in the region.

By business unit

As treasury markets were collected as a composite of net interest income on the assets the bank holds and non-interest gains, ‘there is a net interest income drag on the assets we hold’ when ‘funding cost goes up with rates,’ Piyush Gupta (pictured), CEO of DBS Group, said in the earnings’ media briefing call.

‘The flip to that is if the rate stabilises and comes off, there will be more value in the franchise,’ Gupta said.

The segment’s pre-tax net profit declined by 65% YoY to SG$143m in H1 23 compared with SG$404m in H1 22.

Yet, income from treasury customer sales – which is reflected in the institutional banking group (IBG) and consumer banking group (CBG) business unit income, respectively – embraced a gain of SG$935m, up 11% YoY. The rising figures attributed to ‘higher sales of foreign exchange and equity derivative products,’ despite being ‘partially offset by lower credit product sales,’ stated the bank.

By business unit, the consumer banking and wealth management’s total income gained 80% YoY to SG$4.27 billion in H1 23, while IBG posted a total income of SG$4.69 billion, up 38% YoY.

Click the links to view DBS Bank’s second quarter and first half of 2023 performance summary, CFO presentation, and financial data supplement.