DBS Group Holdings Ltd (OTC:DBSDY) Q2 2025 Earnings Call Transcript

DBS Group Holdings Ltd (OTC:DBSDY) Q2 2025 Earnings Call Transcript August 7, 2025

Edna Koh: Okay. Good morning, everyone, and welcome to DBS’ Second Quarter 2025 Financial Results Briefing. This morning, we announced second quarter profit before tax rose 5% to $3.39 billion. Net profit was up 1% at $2.82 billion. And for the first half, both total income and profit before tax were at new highs. So with us today, we have our CEO, Tan Su Shan; and our CFO, Chng Sok Hui. Without further ado, Sok Hui, please.

Sok Hui Lim: Good morning, everyone. We delivered a strong set of results this quarter despite a very challenging environment. Uncertainty around U.S. trade policy weighed on customer sentiment. Interest rates in Singapore and Hong Kong fell sharply, while currency fluctuations led to adverse translation effects. Amid these headwinds, pretax profit rose 5% from a year ago to $3.39 billion. Net profit was 1% higher at $2.82 billion, even with the impact of the global minimum tax. Total income grew 5% to $5.73 billion. The growth was broad-based. Net interest income was higher, supported by strong deposit growth and proactive balance sheet hedging. Fee income and treasury customer sales reached their second highest levels, while markets trading income more than doubled to a 13-quarter high.

For the first half, pretax profit rose 3% to a record $6.83 billion. Net profit was little changed despite higher tax expenses. Return on equity was 17.0% and return on tangible equity was 18.8%. Total income rose 5% to a new high of $11.6 billion, with growth across both the commercial book and markets trading. The cost-to- income ratio was stable at 39%. Asset quality was resilient. The NPL ratio improved during the quarter from 1.1% to 1.0%. Specific allowances were 15 basis points of loans for the quarter and 12 basis points for the half. Allowance coverage was 137% and 236% after considering collateral. Capital remained strong. The CET1 ratio was 17.0% on a transitional basis and 15.1% on fully phased-in basis. The Board declared a total dividend of $0.75 per share for the second quarter, comprising a $0.60 ordinary dividend and a $0.15 capital return dividend.

Compared to a year ago, second quarter net profit rose 1% to $2.82 billion. In the chart, you can see that within the commercial book, a 4% or $144 million decline in net interest income in the commercial book from sharply lower rates was offset by higher noninterest income. Fee income rose 11% or $119 million, led by Wealth Management, while Treasury Customer Sales and other income increased 9% or $44 million. Markets trading income was significantly higher, rising $231 million to $418 million as funding costs fell and trading opportunities were captured. Together with stable commercial book income, total income rose 5%. Expenses increased 5% or $98 million to $2.27 billion, led by staff costs. Total allowances fell 10% to $133 million. Specific allowances remained low at $150 million or 15 basis points of loans or $17 million of general allowances were written back this quarter compared to a charge a year ago.

Compared to the previous quarter, net profit was 3% lower. Total income declined 3% with commercial book contribution moderating from a record first quarter, partially offset by stronger markets trading income. Commercial book net interest income fell 3% or $94 million as the impact of sharply lower interest rates were mitigated by proactive balance sheet hedging and strong deposit growth. Fee income declined 8% or $108 million, largely due to lower wealth management and loan-related fees compared to record first quarter performances. Treasury customer sales and other income were also softer, down 5% or $26 million. Markets trading income rose 15% or $55 million on lower funding costs and more conducive trading conditions. Expenses rose 3% or $56 million, driven by higher non-staff costs.

Q&A Session

Total allowances fell $192 million reflecting the prudent general allowance of $205 million set aside last quarter to prudently strengthen reserves. For the first half, net profit fell 1% to $5.72 billion due to higher tax expenses. Profit before tax rose 3% to a new high of $6.83 billion. Total income grew 5% to a record $11.6 billion. Commercial book net interest income fell 1% or $72 million to $7.34 billion, a 19 basis point decline in net interest margin from lower rates softened by balance sheet hedging was mostly offset by balance sheet growth. Fee income rose 17% or $351 million to $2.44 billion as wealth management and loan-related fees were both at new highs. Treasury customer sales and other income fell 3% or $29 million due to nonrecurring gains in the first half of 2024.

Excluding these gains, it rose 11% from record treasury customer sales. Markets trading income increased 80% or $348 million to $781 million. Expenses rose 5% or $233 million, led by higher staff costs. Profit before allowances grew 5% to a record $7.15 billion. Specific allowances remained low at $270 million or 12 basis points of loans compared to 9 basis points a year ago. General allowances of $188 million were taken in the first half. Next slide. Group net interest income for the second quarter was little changed from the previous quarter and higher from a year ago despite the sharp declines in interest rates. Lower interest rates impacted the commercial book where net interest income fell 3% quarter-on-quarter and 4% year-on-year to $3.63 billion, while net interest margin declined 13 basis points quarter-on-quarter and 28 basis points year-on-year to 2.55%.

The impact of lower rates was mitigated by 2 factors: first, proactive balance sheet hedging and second, strong deposit growth. On the first point, proactive hedging, we have been increasing the proportion of fixed rate loans in the commercial book. This significantly reduced our net interest income sensitivity and helped cushion the effects of the Fed rate cuts last year as well as the sharp declines in SORA and HIBOR. On the second point on deposit growth, we grew deposits by $11 billion this quarter and $40 billion from a year ago in constant currency terms. The growth in deposits exceeded loan growth and the surplus was deployed into liquid assets. This deployment was accretive to net interest income and return on equity, though it modestly reduced net interest margin.

For the market’s trading book, net interest income turned positive for the first time in 11 quarters. The improvement was supported by lower funding costs as interest rates fell as well as by reduced accounting asymmetry. Combining the commercial book and the markets trading, the group’s net interest income fell 1% from the previous quarter and rose 2% from a year ago to $3.65 billion. Group net interest margin declined 7 basis points from the previous quarter and 9 basis points from a year ago to 2.05%. For the first half, group net interest income rose 3% to $7.33 billion, reflecting balance sheet growth and the effects of hedging. Net interest margin was 2.08%, 6 basis points lower than a year ago. Gross loans amounted to $439 billion. They grew 3% to $11 billion in constant currency terms over the first half, led by a broad- based increase in non-trade corporate loans even as tariff-related uncertainty weigh on borrowing sentiment.

2 percentage points or $7 billion of the growth occurred in the first quarter and 1 percentage point or 5% occurred in the second. During the quarter, deposits rose 2% to $11 billion in constant currency terms to $574 billion. Fixed deposits rose $9 billion, boosted by inflows amid macroeconomic uncertainty. Most of the growth was raised at favorable pricing in line with interest rate declines. CASA increased $3 billion due to retail inflows as there were some transitory outflows from IBG customers near the quarter end. For the first half, deposits rose 5% or $29 billion. More than half of this increase came from CASA. Liquidity remained healthy. The group’s liquidity coverage ratio was 147% and net stable funding ratio was 114%, both comfortably above regulatory requirements.

Fee income. Compared to a year ago, second quarter gross fee income increased 10% to $1.40 billion. The growth was led by Wealth Management, which rose 25% from broad-based growth in investment products and bancassurance. For the first half, gross fees rose 14% to a record $2.90 billion. Wealth Management and loan-related fees reached new highs. Wealth Management fees rose 30% to $1.37 billion and loan-related fees rose 11% to $412 million. Investment banking and transaction service fees were also higher. The next slide shows the Wealth Management segment. This comprised net interest income, fee income as well as treasury customer sales income for our Private Banking, Treasurer, Private Client and Treasury segment. Second quarter Wealth Management segment income grew 5% year-on-year to $1.35 billion.

The growth was driven by a 19% increase in noninterest income, which more than offset a decline in net interest income from lower rates. While wealth management activities slowed in April due to Liberation Day, it was followed by recovery in May and June. For the first half, Wealth Management segment income grew 8% to a record $2.84 billion due to a 26% rise in noninterest income. Assets under management grew 16% year-on-year in constant currency terms to a new high of $442 billion. The percentage of AUM in investments was 56%. Net new money inflow of $9 billion in the second quarter was above our recent quarterly run rate of $5 billion to $6 billion. Commercial book noninterest income. For the second quarter, commercial book noninterest income, which is boxed up in red on this chart, rose 11% from a year ago to $1.69 billion from higher fee income and treasury customer sales to both wealth management and corporate customers.

Excluding nonrecurring items a year ago, commercial book noninterest income grew 13%. For the first half, commercial book noninterest income grew 10% to $3.51 billion, led by record fee income and treasury customer sales. Excluding nonrecurring items a year ago, the growth was 15%. Next slide, Hong Kong. Despite the sharp drop in HIBOR, Hong Kong’s first half net profit rose 11% in constant currency terms to a record $871 million. Total income increased 8% to a new high of $1.78 billion, driven by higher noninterest income. Net interest income and net interest margin were resilient despite subdued loan demand and the HIBOR plunge. Net interest income was 1% lower at $1.01 billion, as a 5 basis point decline in net interest margin to 1.75% was mostly offset by deposit growth.

Deposits rose 9%, led by CASA inflows. Loans declined 5% due to subdued credit demand and repayments. Surplus deposits were deployed into nonloan assets, supporting net interest income. The lower net interest income was more than offset by double-digit growth in both net fee income and other noninterest income. Net fee income rose 25% to $505 million, led by wealth management. Other noninterest income grew 17% to $268 million from higher treasury customer sales as well as trading gains. Expenses increased 4% to $636 million from higher staff costs. Cost-to-income ratio for Hong Kong was at 36%. Total allowances were 18% higher at $106 million with the specific provisions at 19 basis points of loans. Nonperforming assets. Asset quality remained resilient.

Nonperforming assets declined 4% from the previous quarter to $4.69 billion as new NPA formation stayed low and was more than offset by higher repayments and write-offs. The NPL ratio improved from 1.1% to 1.0%. Specific allowances Second quarter specific allowances amounted to $149 million or 15 basis points of loans. While IPG- specific provision charges of $100 million were lower than recent quarters, write-backs of $28 million were also lower. For the first half, specific allowances remained low at $260 million or 12 basis points of loans. General allowances. General allowance charges were $188 million for the first half reflecting the $205 million charge taken in the first quarter to strengthen GP reserves. As of end June, total allowance reserves stood at $6.44 billion, with $2.33 billion in specific allowance reserves and $4.11 billion in general allowance reserves.

The general provision overlay was stable at $2.6 billion. Allowance coverage was at 137% and at 236% after considering collateral. Capital. The reported CET1 ratio declined 0.4 percentage points from the previous quarter to 17.0%. The movement was driven by capital return initiatives of 2.2% and an increase in risk-weighted assets. The pro forma ratio on a fully phased-in basis decreased 0.1 percentage points to 15.1%. The leverage ratio was 6.5%, more than twice the regulatory minimum of 3%. Dividend. The Board declared a total dividend of $0.75 per share for the quarter, comprising an ordinary dividend of $0.60 and a capital return dividend of $0.15. Based on yesterday’s closing share price and assuming that total dividends are held at $0.75 per quarter, the annualized dividend yield is 6.1%.

In addition, we have bought back about $370 million worth of shares under the 3 billion share buyback program, representing around 12% of the program. In summary, we delivered a strong set of results for the first half despite the challenging environment. Our ability to manage the balance sheet nimbly, grow deposits and capture market opportunities helped offset the external pressures. As a result, net interest income, fee and treasury customer sales all reached new highs, while markets trading performance was the strongest in 4 years. Return on equity was 17% even after the impact of the global minimum tax, reflecting payoffs from our investments to deepen customer relationships across wealth management and corporate banking. While external uncertainties remain, our proactive management of the balance sheet puts us in a good position to navigate the interest rate cycle, while strong capital and liquidity, ensure we are well placed to support our customers.

Thank you for your attention. I’ll now pass you to Su Shan.

Su Shan Tan: Thank you, Sok Hui. So I would like to reiterate that we had a solid Q2 in spite of seeing what were really factors that would include a perfect storm, right? You had a plunge in SORA, you had a plunge in HIBOR and a strong thing and a lot of uncertainties around Liberation Day on April 2 followed by Middle East tensions and a lot of geopolitical headwinds. So Q2 was a tough quarter, but our team delivered a pretty resilient financial numbers, in spite of the tough quarter. And I’d like to think of it as when the markets hit you, whether it’s rates or FX, you mitigate those hits by increasing your volume, for example. And if there are increased volatility, which there was, then you mitigate that by having a good trading income and you hedge when you can.

The good news about volatility is I haven’t seen interest rate volatility like we have in the last few months. But that also, on the flip side, allows you opportunity to put in your hedges when you need to. So the diversification of income stream, buttressing — creating a fortress balance sheet, to mitigate whatever the market throw you is important. So building resiliency in your balance sheet, building resiliency in your operating income but continuing the structural growth path of things like wealth management, GTS, digitalization, financial institutions, et cetera, means you can mitigate these market volatilities. So as Sok Hui rightly said, we delivered a solid Q2 record first half total income, record first half profit before tax. Our net profit was affected by higher tax rates and record fees.

The fees I felt were quite pleasing because it was across the board. It was also in wealth. It was also in loan fees and it was also in treasury sales fees. So all around, I think fees were firing on all cylinders. I’m going to answer the question you’re all going to ask me so you don’t have to ask me this later on, which is what is our interest rate sensitivity. And perhaps better for you to look at the interest rate sensitivity around currency blocks, but also focus, as Sok Hui said, focus on the NII and not the NIM because as interest rates drop, if your volume grows, then you grow your NII income, that will mitigate whatever your NIM rates are. And in the past, people focus on pass-through rates because that’s what we were used to. The Fed cuts rate, rates in Asia go down.

I think that relationship has broken down. So no point trying to predict what the pass-through rates are going to be for different currencies. Instead, focus on what part of your balance sheet is floating. So for us, for Sing dollar, we have a net floating asset of about $90 billion. So you can work the sums up. So for every basis point, we will move down, we will lose $9 million in the Sing dollar book. Then in the non-sing dollar book, which is primarily U.S. dollars, we have roughly $40-plus billion in net floating liabilities. So therefore, every 1 basis point drop in the rates will lead to a plus $4 million — $4 million rise in our total income. So you can net that figure off, right? I also believe that the FX rates also drive a lot of the interest rate volatility.

Just to remind everyone, sing dollar — the sing dollar is a managed, right, the SG&A. So focusing also on the FX and the forward rates could be instructive. It is, however, volatile, so hard to predict. But that’s why I’m pleased that our treasury team has done a really good job on mitigating any of these headwinds with very nimble interest rate swaps and FX hedging as have our treasury and our trading teams as well. So as a result, our group NII is little change quarter-on-quarter. And I think the volume growth in both deposits and also solid steady growth in non-trade loans have helped us. We continue our strong growth in deposits in July as well. So the momentum looks like it will continue for the full year. I talked — Sok Hui talked about strong and record AUM and net new money flows.

That was very pleasing. And whilst we focus a lot on the high end, so PB, TPC, PP grew by net new money by about $9 billion that was an outstanding figure. I also want to draw your attention to the fact that wealth management is not just about the high end, it’s also about the middle and retail. And there, I’m very pleased to see that the team is firing on all cylinders, whether it’s onshore retail wealth, offshore connectivity, whether it’s retail digital wealth or physical, whether it’s banker sales or just deposit growth, all segments are firing quite well. A lot of investments have gone into making our RMs and our digital app more contextual, more timely nudges, more relevant nudges and a turnaround time for our clients to do stuff as also shortened.

So the net new money, the increase in productivity, the consistency of growth is there. Similarly, for IBG, I’m very pleased to see that — you will see that our loan growth, it’s quite seasonal. You always have a first strong first quarter and second quarter comes down. The last quarter will be also quite quiet. But year-on-year, you will see the consistent growth in loan fees. And why do you see that? It’s because the industry heads, the IBG heads of different sectors, and our syndicated loans team are working very closely together to make sure that we keep increasing market share. We keep deepening our industry expertise and we keep winning the lead manager role. That’s important. That’s structural growth as well. So time after time, we went from #4 to #3 in the league tables, #3 now to #2 in the league tables.

This takes time to build, but it’s consistent and it’s structural. Markets trading also at a 13-quarter high. As I said, when the markets are volatile, you do what you can and you make hay while all the sunshine, and I think our markets trading team certainly did a brilliant job there. And asset quality has remained resilient. We are very Kiasu in Singlish, but we’ve been very — we’ve been very circumspect. We look very closely at cash flow, projected cash flow. We stress test after stress test, whatever the tariffs are, we’ll stress test it, first order, second order. We’ve been very cautious around the SME and consumer unsecured loans. So we didn’t get hit so much. We’ve also been cautious around real estate in both China and Hong Kong. So that was all right.

So I think the asset quality remains resilient. Next slide. What’s our outlook for 2025? We continue to say the same thing, which is we expect net interest income to be slightly above 2024 levels in spite of the lower SORA and HIBOR and that was for all the reasons I explained. We hope to see SORA stabilizing going forward. We hope to see HIBOR also rebounding going forward. And we expect about 2 more rate cuts in the U.S. in line with the market. But as I reminded you, lower U.S. dollar rates is ironically actually quite good for us. And commercial book noninterest income should continue to grow in the mid- to high single digits. Again, consistent growth in Wealth Management, both in net new money and fee growth and new-to-bank growth. We’re pretty steady in terms of cost management.

So cost income ratio should be in the low 40s range. We’re beginning to see some efficiency and productivity and capacity growth in the use of AI and gen AI. And also a reminder that all those investments we made in the past around the way we work, around our data lake, around AI generative AI continues to bear fruit. We are now able to create models that are predictive in terms of money flows. So we try and capture more than our fair share of deposit growth in terms of net new money growth, in terms of fee growth, et cetera. And our GP reserves continue to be pretty high. We have a GP overlay, which is stable at $2.6 billion, so pretty conservative there. As I mentioned last quarter, we were not affected by the first order impact of the U.S. tariffs, but we did take to be conservative, the $200 million GP there — additional GP then in the first quarter, and we remain resilient.

There were some announcements this morning. For India. I checked with Kwee Juan, our IBG head in India and our India head. And I think so far, the first order impact is almost negligible, right? Hardly anything because the sectors that will be affected are mostly sectors that we’re not gearing to; textiles, jewelry, apparel, that kind of thing. The electronics and pharma have not been announced yet. So net-net, we expect profits before tax to be okay, but our net profits will be below only because of the global minimum tax of 15%. Next slide. So this is a new slide, which I thought I will draw up to just — also being preemptive because I thought you might ask me to remind all of you that we were very active and still continue to be active in the digital asset space, right?

A lot of banks have talked about the GENIUS Act and Hong Kong MAS announced stuff. So I thought, listen, I better come up with a slide to show you what we’ve been doing in the digital asset space since 2021 and explain where we’ve chosen to play. So here, you can see in terms of life cycle, we are able to issue and list digital tokens. So if anyone wants to tokenize anything, so for example, in 2021, we did our first security token issuance and it was for ourselves. We are able to tokenize money market funds, you want to tokenize deposits, stablecoin, et cetera, not an issue. So we are in the business of issuance and listing in any digital exchange. We also have our own digital exchange called DDEX, which is a venue for customers to go on-ramp and off-ramp from fiat to digital assets, digital assets back to fiat.

It’s the first bank-backed digital asset exchange in Asia. And our volumes have grown quite nicely in the first half, they’re up some, I don’t know, 171% or something, so pretty solid. We also provide custody for our customers. We call this institutional grade custody. I think people, customers, institutions, et cetera, FIs have wanted to now deal in digital assets. They’re looking for custody, solid, safe, reliable, resilient custody arrangements, and we are that trusted partner. So custody growth is sort of slow and steady. And we’ve also begun to do trading and structuring, whether it’s structured products, structured notes, derivative, OTC, repo, reverse repo, et cetera. So also beginning to do that. The market is starting to be quite active there.

Then in payments and settlements, right? This is what we call DBS Token Services. This is all using the blockchain, which enables you to fulfill atomic real-time settlements for your customers. So customers who have a lot of real-time payments, they need 24/7, they need you to be available on a weekend, they want instant settlement. This is the answer to it. Customers who are big platform companies who have multiple merchants, multiple payment needs. This is a great solution for them. So for example, with Ant, we announced, as you know, last year, a 24/7 real-time liquidity management. We tokenized their treasury — we created treasury tokens with them with their Whale platform, and they can now use this for 24/7 multicurrency treasury and liquidity management.

Then we also do conditional payments, which is basically programmable money, like smart contracts, so you can only use this money for certain payments. And again, this, we work with the government Enterprise Singapore to program payments around vouchers or fund disbursements. So this eliminates a lot of the manual reconciliation that you need to do. And then programmable rewards. So PayLah! today, you can burn your credit card rewards on your PayLah!, scan at any net merchant and that is, again, programmable digital vouchers, which is powered by tokenized deposits and smart contracts and nicely embedded in the DBS PayLah! app. We just launched this, this month — last month, sorry. And then tokenized deposits. This is where we piloted it a few years ago, purpose-bound money, et cetera.

You can tokenize sing dollars with smart contracts. And we also issued digital sing dollar as tokenized deposits is something called Project Orchid few years ago. So basically interoperable, whether it’s CBDCs, e-Hong Kong dollar, e-CNY, et cetera. We want to be a partner for any stablecoin issuer. And so we want to also be the picks and shovels, right, in this whole ecosystem. We believe that being a trusted partner to help whether you want to issue, you want to trade, you want to customize and you want a bank, we’re banking the ecosystem, helping them to reconcile go on and off-ramp and also provide collateral management and reserve management for anyone who’s issuing stablecoins. So in short, we’re there. We’ve been playing for quite a few years.

We are also really keeping our eyes out on regulations because we want to do this correctly. We’re not here to do things that are not regulated. So we want to be a trusted regulated bank that plays in the digital asset space. So we want to innovate, but we also want to do this responsibly. I want to build on our head start. We’ve had a head start since 2021. We want to continue to build on our head start, build on our experience, build on our expertise to be a trusted digital player in this ecosystem. That was my last slide. We’ll now open for questions.

Edna Koh: Yes, happy to take questions. Before you ask your question, just 2 things. One is we have a live stream going on. So if you could speak into the mic, just so that the people tuning in online can hear your question, too. And the second thing is if you could introduce yourself and the publication you represent before you ask your question. We have in front of you or roving mics, so let us know which one is easier. Chanya?

Chanyaporn Chanjaroen: Chanyaporn Chanjaroen from Bloomberg. Congratulations on the nice beat and the numbers. I have 2 questions. First one, what do you see as the biggest risk to the bank’s performance in the second half of this year? Second question from my crypto colleagues, my digital assets colleague. I would like to know about your plans on digital assets from here, given that you have head start. What is going to be the next big thing for DBS in this platform? And on the CBDC work, will you be pushing ahead on this, given the momentum of this private stablecoins, you said you will partner with issuers. Could you talk a little bit more and name the partners?

Su Shan Tan: All right. Let me take the first question. In terms of what are the biggest risks to the bank’s performance. Well, clearly, it’s going to be interest rates and FX, right? So we are a price taker on interest rates and FX. But as I said, I’ve been very transparent on how much we will make or lose as interest rates go down or up, and you look at — and I said very clearly, don’t try and figure out the pass-through rate. Just look at what we have as floating liabilities and floating assets, what currency and then work out the numbers. But as I said, the — and always work on the mitigants? What are the mitigants? Volume growth? How do you get volume growth? You get new to bank customers. You give them a great experience digitally and physically and you’re in that operating journey, whether it’s retail or SME or corporate accounts just get a lot more in their operating rigor.

The good news is, as rates go down, actually, interest rate elasticity also goes down. From 3 to 2, there’s a big drop. From 2 to 1, there’s a big drop. So people get less — there’s more lazy money around the system. And there’s also a lot of inflow into both Hong Kong and Singapore, the 2 big hubs that we operate in. So whatever interest rate drops just mitigate by volume growth, right? But what’s the biggest risk is still interest rates and FX. That’s the financial risk. In terms of what are the other risks, I mean, other operating risk, which I think as an industry, we are all very focused on is cybersecurity, right? We have to be all over this. We have to be sort of on our front foot. We have to guard our customer assets. We’ve got to guard our resiliency and technology and be able to predict, prevent anything bad from happening to our customers’ hard-earned money.

So that’s the biggest risk in terms of operating rigor. You want to chime in on anything else, Sok Hui?

Sok Hui Lim: No.

Su Shan Tan: So that was your first question. The second question, I’m going to start the answer, but I’m also going to arrow my colleagues, Kwee Juan and Soon Chong to amplify my answers, if I may. So what are our plans for digital assets? This is really very much work in progress because the regulations are coming fast and quick, right? I think under Trump suddenly with the GENIUS Act and other acts coming through, it’s been coming very quickly. So we have to be all over this. The key message I want to give is that we want to play within the — we have to play within the regulatory construct, and we want to be a trusted and responsible bank that’s highly regulated to play in this. So we’re not going to be doing — we’re not going to take too much risk, yes.

Having said that, though, we still believe that being that provider of services within the ecosystem, what we call the picks and shovels, is actually probably providing a good, solid trusted service. You wanted to trade on-ramp, off-ramp, you want to treat stablecoin USDT or whatever crypto assets come to DBS DDEX. We have a trusted digital exchange. If you want to issue a stablecoin, hey, we can help you to manage your reserve around the stablecoin. If you want to program your treasury, program your deposits, we can help you to do that because that helps you to provide real-time settlements and payments. If you want to tokenize something, be it your property, your money market fund, et cetera, we can help you to do that. We can help you to tokenize, to issue, to list and to distribute.

So that’s like an end-to-end service that we want to provide to our customers, whether they are FIs, nonbank FIs, platform companies, et cetera. I’ll pass the mic to Kwee Juan and Soon Chong, yes.

Kwee Juan Han: If I may just bring back the last slide for — that Su Shan showed in the CEO deck. So you can see on this slide, there are 4 different segments that we play. And I think you operative 3 words that you should remember is agility, optionality and speed. What we have built is capabilities for us to allow our customers. For those who want to list anything that is digital on the financial assets, we have the ability to do so under listing. If you want to trade on the 6 currencies that we have on our digital assets against a fiat. That’s what we have as ability for any digital players who want to use us because we do have the market players that provides the pricing. And on payment and settlement, we have built the capabilities for us to do programmable money and operating on the blockchain.

So depending on where the regulation allows banks to play and the demands of our customers, we can use these capabilities to again pivot for our clients and serve them well. And on the reserve bank side for stablecoins, today, we are doing something with straight act, and that allows us to understand how to manage reserves for stablecoin issuers. And that knowledge allows us to then know how to navigate as the regulators form their views on what banks can do on that front.

Edna Koh: Soon Chong, anything to add? No. Okay. Joey?

Unidentified Analyst: Joey from [ DBS ] Singapore. Just quickly here on the GP write-back of $17 million during the quarter. Was this largely because of the higher GP set aside in the first quarter? And because I think our peers have maintained or increased their GP in the second quarter, yes?

Sok Hui Lim: So in terms of our methodology, we actually set aside GP as a company goes from amber to red to weak. So by the time it moves to an NPL, there will be a release of the GP that was booked earlier and that was what happened this quarter, right? So we had an NPL. So therefore, the ECL will be released. So it’s just a natural movement for this quarter. So the GP that we set aside of $200 million in the first half was still intact. The overlay we have on baseline general provisions is still intact at $2.6 billion.

Unidentified Analyst: Yes. Just I’m going to go through my other questions here. Could you just provide more color on the first half treasury customer income? I mean, following the surge this first half, is this sustainable going forward? Secondly, your point about increasing volume to mitigate falling rates, right? And also with your point about wealth management containing the middle and the retail segments, does this mean you’ll be increasing staff and RM count in the second half and going into 2026? And if so, by how much? And finally, I think NII has been coming down for the quarters, but you expect the group NII to be slightly above 2024 levels. So further on your strategy of growing volume here, where and what types of loans are you seeing? Do you hope to see this growth coming from? Because I think Hong Kong loan growth is down 5% year-on-year in the first half.

Su Shan Tan: Okay. Let me take your question around treasury sales. And then maybe I will arrow Soon Chong to talk about his staff and RM plans for wealth. That was the question around how do we see the second half since we’re investing in wealth, what our staff and our client plans, and I can take the NII growth figure as well and the loan growth figure. Okay. So on treasury income, volatile markets leads to sometimes more trading opportunities in terms of interest rate swaps and currency swaps. So for corporate clients, for example, if they were looking to hedge and now you have the chance to hedge, they will hedge. So we’re seeing that happening right now. So floating to fixed, for example, when rates come down, you lock in a lower fixed rate, that’s good for you, do it.

And the FX, if it’s moving in your favor, you do it. So you leave overnight orders and you get it executed if Trump says something or the markets react badly or well or whatever, whatever moves in your direction, you can do it. We’ve also done stuff on our IG app where you can lock in a rate, a forward start, for example, so not forward that, but a lock-in for future use, for example. So coming up with different permutations on how to help our clients navigate the volatile markets, but also lock in opportunities. That’s led to this growth. That’s for IBG. For CBG and for wealth, it’s really — as interest rates go down, people will start to invest more. The STI has gone up, right? So I think there’s definitely more animal spirits in the Asian markets.

Also, customers are looking to diversify. Everyone had the MAG 7 and they were very overweight U.S. dollars. And now customers are thinking, “Oh, maybe I should diversify.” I should diversify into Asian currencies, I should diversify into the Hong Kong stock market, which has been on very strong performance, lots of IPOs, and Singapore is also doing well. So I think that’s just a flow of funds back into Asian markets and Asian wealth management across the board. So that’s been organic and structural. And I think that will — that trend should continue as on. But of course, fees go up and down with the markets. I can’t predict where the markets will go. The key is your net new money and your AUMs have to keep growing, so you have structural growth.

We will invest in people and technology. We work them together, can’t be just one and not the other. Soon Chong can give you more color on that. But having that holistic growth, bet down the customer, do stuff for them, structure. I’ll tell you what’s very interesting is actually, you didn’t ask me that question, but I will plant the question for you, which is that people are now looking at managing their long-term estate planning. There’s a massive wealth transfer happening, first generation, second generation, third generation. And so you see the banker growth that we have is really strong. And that’s because people are planning for their future generation, their estate planning, no matter how rich or not so rich, but affluent rising. Affluent, there’s a real need estate planning now.

And that’s where we come in. We’re trusted partner, long term, safe, but we work with the insurance provider, and we help to structure your estate planning for your next generation. We’re seeing that growth very solid across all markets; North Asia, South Asia, international, et cetera. And I would just answer the NII growth, and then I’m going to pass the mic to Soon Chong to answer on the staff and RM plan. So on NII growth, yes, we guided that will be — NII, as I said, right, focus on NII, don’t focus on NIM, because NIM will go down with the markets, but NII can go up with volumes. And it’s how you mitigate that? And also how you hedge your NII risk nimbly that will keep you resilient and hopefully keep you ahead. So that’s why we guided NII growth to be still above 2024 million.

A big chunk of it is the deposit growth that we are seeing, and I already hinted that July continues to be very strong on deposit growth. The nontrade loans, so we don’t give away the bank, but the nontrade loan is still solid. And where is that coming from? That’s actually quite wide across the board. So whether it’s tech, we call it TMT, but tech, right, data center growth is very strong, whether it’s real estate, real estate GLS in Singapore, real estate also in Japan, in Tokyo, in London, there are some Asian investments there looking at opportunities. The private asset growth is there. And so we’re seeing selected growth in tech, in TMT and in sort of more upstream in logistics and transportation as well. So actually quite well spread across the board.

I’m going to pass the mic to Soon Chong now to talk about the RM and plans for growth in the second half, if you want to talk about that?

Soon Chong Lim: Yes. So on the RM growth, actually, we have been quite proactively growing our RM numbers, right, from last year. And in fact, we have kind of front loaded already. We have front-loaded pretty much of them in the first half of this year. So we’ve kind of hired probably about 80%-ish of what we wanted to hire already. But notwithstanding we are obviously always very nimble, right? And as we see opportunities, we are still in a growth mode. So we are very encouraged, as you can see from the wealth numbers, the momentum has been very, very strong across the board. So we look at it across the full wealth continuum as well. So 2 main points. One is we’ve seen actually very, very good growth on the private bank PBTPC kind of segment. So that’s the high net worth, ultra-high net worth segment across the markets. At the same time, we are also seeing a very strong momentum in our treasuries business. So that’s actually been quite clear in the numbers.

Su Shan Tan: What’s quite pleasing is also between IBG led by Kwee Juan and Soon Chong’s wealth CBG business. The one bank initiative that we’re doing now is really yielding fruit because we help in the industry coverage, in the IBG coverage, whether it’s family business or corporate. We help them with their operating business. We are now helping — we’re also winning market share in capital markets, whether DCM, ECM, M&A. We help them with the structuring, their wealth creation in their business, their loans that they need, commercial loans, bridge to IPO, whatever it is. So it’s quite end-to-end, right? Then when they do IPO or they need a bridge or whatever, then the wealth team comes in and helps with the structure, estate planning, et cetera.

So this is quite sticky. It’s quite a sticky long-term relationship that we create with Asian family wealth, with the wealth creation and the wealth management based on industry insights, market access, liquidity solutions, estate planning and then wealth management. So it’s pretty end-to-end. Ultra?

Yantoultra Ngui: This is Yantoultra from Reuters. I just want to get your view on with more trade deals being struck by Donald Trump. Do you actually see business outlook in general, improving in the near to medium term? Why and why not?

Su Shan Tan: So it’s a bit of a moving target because every day, you have a new tariff number. And I’d like to remind everyone that we say this internally, right? Tell POTUS about TOTUS. Tell the President of the United States that trade outside the U.S., TOTUS, is actually 89%. And I think that certainly we are seeing that customers have started diversified quite some time ago anyway, doing COVID. But after that, with the first round of tariffs, the first shock everyone just — everyone is looking at the supply chain and saying, “I need to build resiliency.” So customers that need to go to China Plus One have already — a lot of them have already done so or in the midst of doing so. But with the tariff moving up and down, you need to look for new markets, right?

So if you use to sell to the U.S., you’re looking for new market growth elsewhere, whether it’s in Europe, Eastern Europe, Emerging ASEAN, et cetera. People are looking at new markets to buffer the — whatever impact they might have in the U.S. So I think Q2 was marked by uncertainty. Businesspeople don’t like uncertainty, right? So in Q2, we did see people press the pause button. Q3, I think we will start to see people look at more deals. There were some deals that were put on pause. I’m hopeful that some of that will come back. We are beginning to see that coming in. Kwee Juan, do you want to weigh in?

Kwee Juan Han: I think businesses are putting on risk premiums on the projects that they want to do. And with the tariffs now forming, people are beginning to form the risk premiums that they would like to put on the projects and then start to compute on that basis and how do they want to invest going forward.

Edna Koh: Okay. I think we have time for maybe one last question. I will give it to, sorry, Russell.

Russell Pereira: Russell from The Asian Banker. So 2 questions, very quick ones. So first is for Su Shan. So given this resilient performance in a complex environment, could you share some of your key reflections over the last 2 quarter results? And what are some of your strategic priorities that have changed since you’ve taken the helm? My second question is on the geographic strategy. So Singapore, I think for DBS continues to be the bedrock of your earnings. So I just want to ask a little bit about what’s your vision for growing the earnings contribution from the other markets outside ASEAN. And if you do have a target for some of these markets that you can share with us?

Su Shan Tan: Okay. So the key reflections and the strategic priority changes. So when I was first announced as CEO, several quarters ago and I said we want to focus on some structural growth stuff. That hasn’t changed, right? So whether it’s wealth management, it’s GTS, transaction banking, financial spons, financial institutions. These are real strong organic growth verticals. We will continue to double down on that. So that doesn’t change. Has anything — any priorities changed? Honestly, I spent a lot of time in the last 2 quarters building resiliency with my team, right? So my team and I have spent a lot of time building resiliency. Resiliency in balance sheet so that whatever the market stops to you, you are ready for it.

So resiliency in balance sheet, resiliency in operations, resiliency in technology. Resiliency in operations means you also have to make sure that, as I said to Chanya earlier on that your operational rigor, whether you’re scam-ready, whether you are cybersecurity ready, whatever it is, operational rigor, your RCSAs or your stress testing, all that has to be there. And then also looking forward in terms of innovation and resiliency, right? So our CIO has done a lot of work to make sure that our tech is resilient. And we’re also using tech as an enabler to make us more resilient, make us more nimble and also make us more productive. And then our constant — that hasn’t changed. The priorities around transformation and resiliency have not changed.

And whether there’s been any sort of new priorities. Well, as I said earlier on, one of the priorities we had was to really bring the One Bank together and to manage the white space between countries, between segments, between business units, between SUs, that’s working out, right? So that’s not a change. It’s just an added priority. The fact that we are seeing now regulations around digital assets also evolve, we’ve also kind of picked up the pace there and that’s not really a change in priority, but okay, better — this is a chance we can be faster there, also being nimble. And also, we see a lot of — potentially, there’s more opportunities in the GFM space. I don’t know if Andrew is there, but in treasury and markets, whether you want to play in gold, for example, playing in private assets, CIBM.

There’s a lot of connectivity plays that we can now also move to the forefront and customers are demanding more multi products, but also we can bring on quite quickly. And in terms of your second question around geographic strategy. We are an Asian bank. We’re not a global bank. That doesn’t change. But within being a solid Asian bank headquartered and as I said, we’re in 2 big hubs of Singapore and Hong Kong, that hasn’t changed, servicing the rest of Asia. But Taiwan, India, China are all — Indonesia, these are all growth markets for us. They’re all part of our core markets. We will continue to grow them. There will be ups and there will be downs, but they kind of — they don’t all move together. So there’s some resiliency and diversity in those 4 markets.

Having said that though, there are new connectivity markets that are interesting to us. London actually for us has been growing very well. So we are seeing the sort of the U.K. EU connectivity with Asia growing, possibly as a result of Trump, and also as a result of just more organic trade between the 2 blocks. We’re also seeing growth between the Middle East and Asia growing, again, organic structural growth, especially with the GCC. So we see opportunities for us to play in some of these growth, the EMEA markets in very clear verticals. It’s in wealth management and in financial sponsors, financial institutions.

Edna Koh: Okay. I think that’s probably all the time we have for today. So thank you all for coming, and we’ll see you next quarter. Thank you.