SINGAPORE: DBS Group Holdings Ltd has unveiled a multi-billion-dollar share-buyback programme, as wealth management fees and markets trading income drove third-quarter profit.
South-East Asia’s biggest lender said the S$3bil (US$2.25bil) buyback is underpinned by a strong capital position and earnings generation. This followed a series of record earnings and above-peer returns to investors in recent years under the tenure of chief executive officer Piyush Gupta, who will retire in March. His successor Tan Su Shan said she would continue the approach of returning capital.
DBS shares rose almost 6% in Singapore trading, the most since November 2020, outpacing gains by its local rivals Oversea-Chinese Banking Corp and United Overseas Bank Ltd. Its stock has gained more than 36% this year.
While the share repurchase programme is a “positive surprise,” the value creation is limited given the lender’s high valuation, Morgan Stanley analysts led by Nick Lord said after the earnings. DBS is trading at more than 1.7 times its book value, the highest among the three major Singapore-based banks. Similar to other firms, DBS periodically buys back its stock in open market.
This is the first time, however, such a repurchase will be cancelled. Post-buyback, DBS will retain about S$6bil in excess capital, according to Bloomberg Intelligence analyst Rena Kwok.
DBS also said its net income expanded 15% to S$3.03bil in the three months ended Sept 30, the bank said in a statement.
That beat the S$2.74bil average estimate by analysts surveyed by Bloomberg. Its earnings echoed that of global banks including HSBC Holdings Plc and Standard Chartered Plc whose wealth businesses have helped them deliver better-than-expected profits. An interim dividend of 54 Singapore cents a share for the third quarter was also declared, reflecting a dividend yield of 5.5%, according to the statement. — Bloomberg
