DBS Group Holdings Ltd
SGX:D05
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DBS Group Holdings Ltd
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Okay, welcome everyone. And want to sort of say that we announced this morning a very stellar set of results. Record net profit of $1.52 billion, up 26% on broad-based growth. So -- and return on equity was 13%, the highest in the decade.
To tell us more today, we have with us our CEO. Piyush Gupta; and our CFO, Chng Sok Hui.
So without further ado, Sok Hui, please.
Hey, good morning, everyone. We achieved record earnings of $1.52 billion for the first quarter, up 26% from a year ago and up 25% from the previous quarter. The increase was driven by broad-based growth in total income of 16% from a year ago and 10% from the previous quarter to $3.36 billion.
Net interest income rose 4% from the previous quarter on a day-adjusted basis from higher net interest margin and loan volumes. Net interest margin improved 5 basis points during the quarter to 1.83% where loans grew 2% or $8 billion. Compared to a year ago, net interest income was up 16%.
Fee income rose to a record $744 million, up 12% from a year ago, led by wealth management fees and cards. Fee income was up 17% from the previous quarter as most fee streams were higher.
The cost-to-income ratio improved 1 percentage point from a year ago to 42%. Excluding [ ANZ ] and a nonrecurring item, underlying expenses were 6% higher than a year ago. Return on equity rose to 13.1%, the highest in a decade.
With interest rates and allowance charges reverting to more normalized levels, the results demonstrate the success of our assets over the years to improve the structural profitability of our franchise.
Asset quality was benign. Total allowances were 18% below a year ago as specific allowances declined to 20 basis points of loans. The amount of nonperforming assets fell 4% from the previous quarter, with new NPA formation at a 4-year low.
The NPL rate improved slightly from the previous quarter to 1.6%. Our capital and liquidity remained strong, with ratios remaining well above regulatory requirements.
This quarter's year-on-year comparisons are affected by a significant 7% average depreciation of the U.S. dollar against the Singapore dollar from a year-ago period. This had the impact of lowering the key reported profit and loss line items by 3 percentage points from the actual change. The numbers on this chart are based on reported currency.
Compared to a year ago, total income rose 16% or $474 million to $3.36 billion. Net interest income increased 16% or $297 million to $2.13 billion. Net interest margin rose 9 basis points to 1.83% from loan pricing in line with the higher interest rates.
Loans grew 13% or $39 billion to $328 billion. The growth was broad-based across corporate, trade and consumer loans.
Net fee income grew 12% or $79 million to $744 million. It was led by the 31% underlying increase in wealth management fees from higher bancassurance and investment product sales. Card fees were also higher partly due to the consolidation of ANZ.
Other noninterest income rose 25% or $98 million to $488 million. There was a gain of $86 million from the sale of a property in Hong Kong. Trading income was also higher. These gains were partially offset by lower gains on investment securities.
Expenses rose 12% or $150 million to $1.40 billion, which included ANZ and a nonrecurring cost item. Excluding these factors, the underlying expenses were up 6%. The positive [ jaw ] resulted in a 20% increase in profits before allowances to $1.96 billion. Total current allowances were $36 million lower at $164 million as asset quality improved.
On constant currency basis, total income was up 19%, and net profit was up 28%. The quarter-on-quarter comparisons are affected by a 3% average depreciation of the U.S. dollar against the Singapore dollar from the previous quarter. This had the impact of lowering the key reported profit and loss [ line items ] by 1 percentage point from the actual change. The numbers on this chart are based on the reported currency. Compared to the previous quarter, total income was 10% or $305 million higher from strong business momentum. Net interest margin was 4% higher on a day-adjusted basis.
Loans grew 2% while net interest margin rose 5 basis points to 1.83%. Fee income was 17% or $108 million higher. The growth was broad-based, led by -- broad-based and led by a 46% increase in wealth management and a 29% increase in loan-related fees.
Other noninterest income was 52% or $166 million higher as the property disposal gain and an improvement in trading income was partially offset by lower gains from investment securities.
Expenses are 3% or $41 million higher. The positive [ jaw ] resulted in a 16% increase in profits before allowances to $1.96 billion. Total allowances of [ $164 million ] were 27% below the previous quarter. On constant currency basis, total income was up 11% while net profit was up 26%.
This chart shows the growth in various income streams over the year-ago period. Business momentum, which had accelerated in the second half of last year, was sustained during the quarter. Total income rose $474 million from a year ago. The size of the increase was greater than all 4 quarters of 2017. Net interest income continued to be the biggest contributor to growth. This was due to a sustained increase in net interest margin compared to the year-ago period as well as steady loan growth.
Net interest margin has been rising year-on-year since second half 2017 after bottoming during the middle of last year. Noninterest income contributed more to growth during the first quarter than the 4 quarters of 2017.
Fee income growth continued to be healthy. The difference was in other noninterest income, which rose during the quarter as a result of an improvement in trading income as well as the property disposal gain. As a 16% year-on-year growth in total income during the first quarter was significantly above the 4 quarters of 2017, the growth in profit before allowances was also substantially higher at 20%.
Net interest income of $2.13 billion was 4% higher than the previous quarter on a day-adjusted basis. Contributing to the strong growth was a higher net interest margin, which rose 5 basis points from the previous quarter to 1.83%. We benefited from high interest rates in all our major currencies, the Singapore dollar, U.S. dollar and Hong Kong dollar. This resulted in a repricing of loans across the board. The increase in loan yields was partially offset by higher deposit costs for U.S. dollar and Hong Kong dollar fixed deposits.
We are maintaining our guidance for full year NIM of at least 1.85% compared to the full year 2017 NIM of 1.75%. This is predicated on 2 to 3 more U.S. Fed rate increases and a meaningful pass-through to SIBOR and SOR as well as the impact of higher LIBOR and HIBOR rates than last year.
We had underlying loan growth of $7 billion or 2% during the quarter. In addition, we consolidated $1 billion of unsecured loans from ANZ in Indonesia, bringing total loan growth to $8 billion. The underlying growth was led by non-trade corporate loans for property transactions in Singapore and Hong Kong, deal-related borrowing and working capital financing. Singapore housing loans also continued to increase but at slower pace than the fourth quarter, in line with market trends.
Our market share of housing loans increased during the quarter. Underlying loan growth for the full year was $30 billion or 10% from increases in corporate, trade and consumer loans. Including $9 billion from ANZ, full year loan growth was $39 billion or 13%.
Deposits rose 2% during the quarter and 13% from a year ago in constant currency terms to $376 billion. They included $12 billion from the consolidation of ANZ, of which $1 billion was from Indonesia in the first quarter. Other funding rose $2 billion during the quarter to $43 billion from issuances of medium-term notes.
Our liquidity ratios remain well above regulatory requirements. The liquidity coverage ratio was 125% while the net stable funding ratio was at 110%.
Gross fee income was $851 million, 15% higher than a year ago. Wealth management fees rose by an underlying 31% to a new high of $331 million. The growth was partly due to the addition of the ANZ customer base. 2/3 of the increase was from investment products, including unit trust as buoyant market sentiment boosted demand. The remaining 1/3 was from bancassurance.
Card fees were 27% higher at $156 million from higher transactions in Singapore as well as the consolidation of the ANZ, particularly in Taiwan and Indonesia. Transaction services fees were a little changed at $156 million as an 11% increase in cash management fees was offset by a decline in trade finance. Cash management accounted for about 60% of transaction services fees during the quarter compared to about half in the year-ago period.
Investment banking and loan-related fees both declined due to fewer significant transactions compared to a year ago. Compared to the previous quarter, total gross fees was 16% higher. The increase was broad-based and was led by wealth management.
Institutional Banking's total income rose 5% in constant currency terms from a year ago to $1.36 billion. As the average U.S. dollar depreciated 7% against the Singapore dollar compared to a year ago, Institutional Banking's reported total income growth was 3%. The constant-currency growth for IBG's profit and loss and balance sheet items on this chart are about 3 percentage points higher than the reported growth.
Cash management income grew 40% from new customer mandates and deeper customer relationships, with the introduction of new products and solutions through digital channels. In addition, while cash management deposits were up 1% to $134 billion, there was a shift towards lower-cost deposits out of more expensive ones, resulting in a higher net interest margin.
The increase in lower-cost deposits was broad-based across all segments, particularly from SME customers. The higher margin of these deposits contributed to the 9% increase in SME customer segment income to $455 million. The increase in cash management income was offset by moderate declines in other products, including loans from lower net interest margin, trade volumes and treasury customer sales.
Consumer Banking and Wealth Management total income rose 19% in constant currency terms from a year ago to a new high of $1.36 billion. The constant-currency growth of CBG's profit and loss items and AUM on this chart, [ about ] 3 percentage points higher than the reported growth. The growth in total income was across all key product categories. Buoyant market sentiment boosted investment product income by 25%. Card income grew 25% from growth in transactions as well as the consolidation of ANZ. The 12% increase in loan and deposit income was due to higher loan and deposit volumes as well as higher net interest margin.
Wealth management customer segment income grew 28% to $663 million. Assets under management rose 22% to $208 billion, including $22 billion from ANZ. Income from the retail customer segment increased 8% to $696 million.
Our market share in Singapore housing loans was at 31% while our market share of Singapore dollar saving deposits was maintained at 52%. Both our housing loan market share and savings deposit market share continued to show incremental improvements quarter-on-quarter.
Total treasury income of $572 million was 18% higher than a year ago in constant currency terms. The increase was 2 percentage points higher than the reported growth of 16%.
Treasury Markets income, which comprises trading, market making and structuring activities, rose by 1/3 to $249 million from the more favorable trading positions in interest rates and equities. Treasury customer income was moderately higher at $323 million. Higher income from wealth management customers was partially offset by declines in income from corporate and institutional customers.
Expenses rose 12% from a year ago to $1.40 billion. Excluding ANZ and the nonrecurring item, underlying expenses were 6% higher than a year ago. The underlying increase was due to higher headcount and other investments to support the growth in business volumes over the past year. We continue to maintain a positive [ jaw ] during the quarter as the underlying 6% increase in expenses was lower than the underlying increase in total income.
The cost/income ratio was 42%. We continue to target productivity gains from digitalization and cost management initiatives and expect the cost/income ratio to progressively improve over time.
Hong Kong. In constant currency terms, Hong Kong's earnings doubled to $436 million as total income increased 48% to $721 million. Excluding the property gain, earnings increased 66% to $350 million while total income grew 31% to $635 million. Earnings and total income, excluding the property gain, were both at new highs. The increase in total income was broad-based.
In constant currency terms, net interest income rose 24% to $402 million. Loans grew 20% from lending to large corporate customers. Net interest margin increased 8 basis points to 1.87% as loans were repriced with higher LIBOR and HIBOR rates.
The deposit franchise improved further as the proportion of CASA deposits increased 5 percentage points over the 12 months to 63%, driven by 32% year-on-year growth in CASA deposits.
Fee income rose 24% in constant currency terms to $166 million. The increase was led by sales of Wealth Management investment products, bancassurance and cash management. Excluding the property gain, other noninterest income more than doubled in constant currency terms to $67 million from higher treasury customer sales and trading gains.
Expenses rose less than income, and the positive [ jaw ] resulted in a 79% constant-currency increase in profits before allowances to $489 million. Excluding the property gain, profit before allowances rose 48% in constant currency terms to $403 million, which was also a record.
There were [ allowances write-back ] totaling $18 million for both impaired and non-impaired portfolios compared to a charge of $20 million a year ago.
Nonperforming assets fell 4% from the previous quarter to $5.8 billion. New NPA formation fell to a 4-year low of under $200 million. The NPL rates improved to 1.6%.
Allowances for impaired loans or specific provisions fell to $162 million or 20 basis points of loans, below our through-the-cycle average of around 27 basis points. Most of the SP charges taken during the quarter were for existing NPLs.
The SFRS international line was implemented on 1st January 2018. One impact of the new accounting standard is the treatment of general allowances. We had $2.62 billion of general allowances on 31st December. This was equivalent to 1% of credit exposures, net of qualifying collateral under the MAS guidelines. This is the level of general loan loss reserve the MAS still requires us to maintain today after the new accounting standard implementation.
On implementation of the new standard on 1st January 2018, the stage 1 and stage 2 expected credit loss, which replaces general allowances under the new standard, was calculated to be $2.53 billion. This was $95 million lower than the 1% required by the MAS.
On the MAS Notice 612, if the expected credit loss is below 1%, the difference must be held as regulatory loss allowance reserve in shareholders' funds. As such, the $95 million was transferred to the regulatory loss allowance reserve on 1st of January 2018. During the course of the quarter, the expected credit loss rose to $2.57 billion. Of the increase, $7 million was for credit growth, net of transfers to specific provisions. This amount was taken through the profit and loss account. The remaining $40 million was taken through the balance sheet, mainly for the ANZ Indonesia expected credit loss reserve.
The 1% requirement on 31 March was calculated to be $2.72 billion. As the expected credit loss of $2.57 billion was lower, a regulatory loss allowance reserve of $150 million was required. As a result, additional $55 million was transferred out of retained earnings during the quarter to increase the RLAR to $150 million. The transfer had no impact on either the profit and loss account or the amount of shareholders' funds.
Both the ECL, the expected credit loss, and the RLAR are used in the computation of allowance coverage. The adoption of the new accounting standard also affected the classification of certain financial assets and the treatment of hedges. These 2 expected to not have a material impact for us.
Our capital ratios remain strong. The common equity Tier 1 ratio was 14.0%, 10 basis points higher than the previous quarter as the accretion of retained earnings was partially offset by loan growth. After the payment of the final and special dividend of 2017 in May, the common equity Tier 1 ratio will be 13.0%, in line with our targeted range. Our leverage ratio of 7.6% was more than twice the regulatory minimum of 3%.
The result of improvement to our franchise has been masked in recent years by low interest rates and high allowance charges. With both reverting to more normalized levels, the increased profitability of our business has become more evident in the first quarter's results. The results were also underpinned by broad-based growth in loan volumes and noninterest income. Business momentum remains healthy as we continue to capture opportunities in a reflationary environment across the region.
We'll continue to maintain a positive [ jaw ] as digitalization and cost improvement initiatives deliver productivity gains over time. The gradual improvement of cost-to-income ratio will be another [ lever ] in enhancing returns for shareholders. At the same time, our continued focus on customer centricity and [ journey ] thinking will allow us to use digital technology to seamlessly integrate banking into the lives of our customers.
Our balance sheet is healthy. Asset quality is benign, with new NPA formation at a 4-year low. Our capital and liquidity are healthy. We are well placed to serve customers and deliver future -- for the shareholder returns in the coming year.
Thank you. I'll now hand you over to Piyush.
Okay, thanks. Thank you, Sok Hui. I actually didn't have that many independent observations this time. As Edna and Sok Hui pointed out, it's a fairly stellar and clean set of results.
I thought, however, I would make a couple of comments on our digital agenda. The good news is that, as you know in November last year when we did our Investor Day, we've had results of our digital transformation for the first half of last year, and then we forecast what we might see for the full year. In point of fact, our actual performance for the conversion from traditional to digital for the full year outperformed the expectations that we had.
So we originally expected that we'd have about 2.3 million digital customers by year-end. We finally wound up at about 2.5 million digital customers by year-end. And our total digital income, which we'd thought we'd hit about $3.1 billion, we actually hit $3.3 billion. And so both in terms of the customer transformation as well as the income we generate from digital customers, that's continuing to track extremely well.
In Singapore, we also are having a lot of good traction from our payment franchise. In the past, I've talked about DBS Remit cross-border payments business, which is doing very well. In this quarter, the business of domestic payments through both PayNow and PayLah! in particular actually also did extremely well. We today have almost 900,000 PayLah! customers or individuals in Singapore who downloaded PayLah!. And the total PayLah! transactions have been going up extremely rapidly.
So we've reached the stage where today, we are seeing about 50,000 transactions a day, 350,000 PayLah! transactions a week, and that's broad-based. That's both person-to-person transactions as well as at the hawker stalls, at the campuses and Comfort taxicabs. So we seem to have [ hit a ] tipping point in terms of PayLah! adoption in Singapore in the course of the last quarter. We're actually quite pleased with that as well.
Outside Singapore, Digibank in India and Indonesia continue to grow well. We have about 1.8 million customers in India. We have -- these include wallet and savings account. I think about 700,000 of them are full savings accounts. We have about 110,000 savings account customers in Indonesia, but the performance are doing well. The average balances per account are continuing to improve quite nicely.
In the first quarter, we also launched our digital lending capability in India and an algorithmic lending product in Indonesia as well. It's very early days. They've only been in the market for less than a month, 3, 4 weeks. But again, early performance in both countries is actually quite good, so we're quite optimistic about being able to layer on these incremental products on top of our base digital and Digibank offerings.
So net-net, the first quarter continued to show good momentum with our digital transformation journey. And we are fairly confident that through the course of this year, we will continue to see the trajectory maintained. Slide.
I guess, the only other thing I'd thought I talk about is outlook for the year. I think global growth momentum is still fairly robust. The U.S. is charging along first quarter slightly slower, but on the whole, it is still very robust. Europe's disappointed a little bit in the first quarter, but it's still higher than most people expected it to be. Japan's behaving okay and so is China in the region.
So our own sense is that the global growth [ reflationary ] environment will continue to stay in place, which means that our opportunities that we see are [ continuing ] to stay before us. As you can see in the last few quarters, we've been growing our [ loan book ] at between $7 billion and $9 billion, roughly about $8 billion a quarter. And we think we should be in a position to continue to do that.
The pipeline's quite good. We can see -- we have line of sight to a whole range of opportunities. As Sok Hui pointed out, the opportunities are broad based. It's not just some property transactions, but there continues to be a lot of deal flow, which we are financing, and there continues to be a lot of demand for working capital. So it's fairly broad based.
What could go wrong? I guess the trade war is on everybody's mind. Our own sense is that the broader trade issues are [ tired ] of barriers on steel, aluminum, on cars and so on. It will have some impact, but unless there's a big crisis of confidence, we don't see them -- that having a really material impact on the overall business climate.
Other than I've written on the slide, the technology sector. I think the impact on the technology sector needs to be watched because the U.S. actions on the back of the intellectual property concerns on Chinese companies -- that could have spillover ramifications, which might be slightly broader. That could even get into the supply chain of the tech sector.
It's hard to [ dimension ] what the impact of that might be, but my own sense is that you will see some more noise in the technology sector though. Overall, I don't expect the trade wars to materially [ derail ] the economy.
[indiscernible] to monetary policy. I think it's quite likely that you will see consistent trade hikes -- rate hikes this year. In fact, I wouldn't be surprised you wind up with 4 rate hikes instead of 3. The general consensus seems to be that you might see an extra rate hike in the course of the year. But given that we're coming from such low interest rate environments, it's not likely to me that you will see again a [ derailing ] of growth on the back of interest rate hikes this year.
If rate hikes continue into 2019, you might start seeing some greater impact and further slowdown. But I think this year, I'm relatively sanguine about the prospect for the global economy.
On NIM, we've guided before that we should expect to see full year NIM of at least 1.85%. If you wind up getting an extra fed rate hike in the course of the year, and obviously, with SIBOR, we [ saw a path ] to improving in the last couple of weeks. We might actually better that by 1 basis point or 2. It's kind of hard to say because I thought the main things which are variable, there's a [ tab ] between the OIS and the LIBOR rate. There is also [indiscernible] uncertainty about the pass-through from LIBOR into both HIBOR and Sing dollar. So you can't call this exactly accurately. But based on current trendlines, I think it's a distinct possibility that we might actually better that 1.85%.
On cost-income ratio, Sok Hui pointed out, we've guided to 43%. Our first quarter is actually better, [ saddled ] a little bit by that property divestment, but I think we should be in a position to be able to come in at the 43%, so underlying expenses for the first quarter actually grew 6%, which is not bad. Some of that is headcount. Some of that is actually wage increase as well.
But on the whole, we think we should continue to be able to deliver good productivity. And finally, asset quality is looking very good. New entity formation is very low. We did not have to provide SPs of any meaningful order for new NPAs. We did take some SPs in the first quarter just to top up SP, mostly in India. But across the region, the overall portfolio is looking good, so I'm actually quite optimistic about the cost of credit line in the course of the year as well.
So [indiscernible] when you put all of that together, it's shaping up to what I think would be a fairly strong year for DBS. Happy to take questions.
This is [indiscernible] from Bloomberg. The first question, how sustainable is the 13% ROE? Do you think that could continue for the rest of the year? Yes, [ that is first one ].
Well, the ROE, as I said, was flattened a little bit because we did have this onetime property divestment in Hong Kong. If you back that out, then your ROE would be closer to 12.5% and not 13%. On the other hand, there's also the case that we gave up almost [ $60 billion, $70 billion ] on the currency -- the strong Sing dollar in the course of quarter. And as you know, next week, we will be dishing out fairly large dividend payment, which means our equity base will [ sink ] when that happens. So some of that should have countered the effect of the one-timer. I think when you look at our current business profile, which is structurally we're doing better and better return businesses, cash management, wealth management, et cetera, if you look at our productivity [ dive ], which is our cost-income ratio [indiscernible] improve. I think this in the back of that, getting to a range of around 12.5% to 13% this year, I think we should be able to do. Whether we hit 13% frankly depends to a large extent on the cost of credit line. It's not entirely clear how the environment will stay the course of the year. So I think 12.5% range, [ I think ], fairly confident of being able to get to.
Yes, and I just move to the next question about credit. I mean, it looks like you have contained it, but do you see any possibility of credit issues building out of the oil and gas sector this year at all?
Of it spilling out of the -- out of the oil and gas sector or in the oil and gas sector?
Exactly. Outside of the oil and gas sector.
Yes, that could be because it depends on what the consequence of the rising rate -- interest rate environment is. I've often said that if interest rates go up, you should expect to see higher delinquencies in the consumer books on secured financing and in the SME books. And so depending on the pace of interest rate increase, [ we ] should start seeing some pickup in cost of credit for those businesses. That's what I was alluding to just now. It's not exactly clear. Will they continue to be relatively okay, which is how they've been? Or will the pop-up in the course of the year increase because interest rates increase? That answer will determine what kind of ROE we might wind with in the year.
And last question. On the IBG division of the bank, the corporate -- income from the corporate side shows no growth. Is it a sector that you want to boost? And why there was no growth in this sector?
Of course, as a sector we want to boost. And actually, if you look at the underlying, the small and medium enterprises, SME part of that business actually grew very nicely. It grew 9% or 10%. What was relatively slow was the large corporate business. So the average of the growth was about 5%, which is not bad, but the large corporate business was somewhat slower, and the large corporate business has got plus and minuses. We're still trying to manage the portfolio for some of the weaker sectors and the [ outstands ] we have. And we're growing some parts of the business, particularly the China business and the China outbound business. We're getting some growth in loans as we speak, and I think that loan growth will be quite good. The real impact in the business was one that treasury-related revenues from customer saves in the top end of the market. Those have been slow. And second, the margins at the top end of the market have been somewhat tighter. But [ absolutely ] we -- we're positive on the business, and actually, we think we'll see good growth in the business in the later parts of this year.
And we have constant-currency growth of 5%.
Any other questions? [indiscernible] Can you speak to the mic anyway?
[indiscernible] from [indiscernible]. I'm just wondering what is the impact from the trade dispute on the trade finance because MAS mentioned in their recent review that if it escalate to maybe more tariff, more coming out of it, the local banks, the trade financing could be hit. So is this something that you're looking at?
Yes, I guess when I say I expect [indiscernible] because MAS is [indiscernible] if it escalates, then of course, [indiscernible]. My view, they won't escalate. That's really why I'm saying I don't expect that the impact that they have right now on the tariff is imposed, impact about less than a couple of percentage points of actual trade between the countries. Now [ they ] do wind up expecting a lot more escalation in the trade war. I don't think that'll happen. I think it'll focused on the technology sector as opposed to more broad based.
No impact or [indiscernible] on the trade...
Our trade book is holding up, and our margins are continuing to increase because yields are better and our volume of trade is holding up so far.
Also another question. I think you have seen in the news that [indiscernible] is growing into like consumer credit, and they're going to sell insurance products for their drivers. I don't know, maybe some passengers, so is this something -- because it's coming to Southeast Asia, what do you see the impact is to see that -- a potential competitor coming?
Yes. I think I do see a potential competitor coming. Having said that, there's something we've anticipated for the last 3 or 4 years. I've said for a period of time that you will expect to see the big tech players being our competition, not just the local banks. And as a consequence, our whole digital transformation over the last 4 years have been focused on trying to preempt some of this new competition. I'm actually confident that in these last 3, 4 years, we've been able to build up our capacities, to be able to hold our own against many of these competitors. There's a point I made about -- if you look at our PayLah! wallets, for example, we're continuing to get a lot of traction in the payments in the country, and if you look at our digital -- other digital offerings, which allow mass market people to be able to consume services, those have actually grown quite nicely as well. So yes, we do expect competition to increase, but I'm also fairly optimistic that all the work we've done in the last 3, 4 years should allow us to be able to maintain our market shares and our position.
I think earlier, Sok Hui mentioned that the [ house bill ] for housing loans is slowing down. Can you give more color on why it's slowing down, the growth, I think you say slowing down?
I think it's growth relative to previous quarters, so it's just the growth for this quarter. If you look at the charts, I think we saw $1 billion growth this quarter compared to sort of $2 billion maybe for the previous quarters. So that is the point I was making, but overall, our market share, notwithstanding the [ lower ] volume, show an increase for the quarter.
Listen, the -- actually compared to first quarter last year, growth is up, so on year-on-year. It's only compared to the fourth quarter last year growth is down.
I wonder whether you could eliminate a little bit on the overall housing loan market, in fact, not just your share, but...
So I do for some reason. If you look at the Singapore housing loan, both drawdowns as well as bookings for the last 3 years, it tends to be very slow in the early part of the year. I think it's to do with Chinese New Year [indiscernible]. No, I think the [ Lunar New Year ] impact that since we look at this thing the market is slow in the first 2 quarters, and it picks up in the third and fourth quarter. So I think the right comparison to eliminate the seasonality is to compare first quarter this year with first quarter last year, and if you do a quarter-on-quarter comparison, actually, this year is stronger than last year. But it's lower than the fourth quarter of last year, and I think that's the seasonality effect that's kicking in.
[indiscernible] from [indiscernible]. Further on the trade dispute and your trade loans. You mentioned about your concern in the tax sector. It's -- and I think you said you expect some more noise. The noise could come out without the trade war being more escalated.
In my mind, I'm thinking of the trade war in 2 ways. One is the broader tariff barriers imposed on a range of goods and the desire to equalize the trade balance. That includes automobiles, steel, aluminum, a bunch of parts. As you know, the U.S. announced the range of [ duty ] on some Chinese [ gold ]. The Chinese announced a range of [ duties ], but at the same time, the Chinese have lowered the import tariffs on automobiles. For example, they've improved access to financial markets. I think after some negotiating, they will come to a situation or position which is acceptable to both parties. I think the Chinese recognize that trade surpluses are very high, and they're willing to make compromises to reduce the size of the trade surpluses, so I think you'll get a reasonable outcome on that part. I think the issues around technology are not to do with trade and balance, that they're to do more with intellectual property rights. I think there is a concern in the U.S. that the Chinese are catching up very rapidly on high-tech. And they want to be able to control that pace of the high-tech [ listing ] in China. IT has less to do with imbalances, less to do with protection of the technology and intellectual property. And if you look at some of the action they have on companies like ZTE and Huawei and so on and so forth, I think those are more targeted from an IP standpoint. I think that will continue to stay in place, and therefore the impact and ramification of that are less clear in my mind.
What's the exposure of DBS loan towards that sector? How...?
Actually, the big company is not big, but you don't know what the secondary impact of that might be because the entire supply change in Taiwan, China, the people who make parts for iPhones, people who supply this thing, it's a fairly complicated supply chain. And as you speak, we're actually [ continuing to do ] a portfolio review of that part of the supply chain to make sure that we can -- we don't get damaged if something untoward happens.
Is that a significant...
No, that's not the biggest...
The last point on -- your trade loan seems to be coming down, and looking at the Page 7 of the slide. But you're saying that the trade loan is a...
I think it must be a currency impact [indiscernible]. I'm seeing trade loans up $1 billion or 2% on the quarter and $7 billion up 17% on the year in the slide.
But these are growth numbers? Those are growth numbers?
Anshuman.
This is Anshuman from Reuters. Can you give some details about the wealth management business? It had a good run for the last 2 years -- at least the last 2 years. I mean, what's -- are you winning more market share? What's going on there?
First of all, the wealth business across Asia is continuing to do well for everybody. I think if you are 1 of the top 10 players in Asia, you're doing well. And you can see that in the reported results of all of the Swiss banks, the large regional banks and so on. As you know, we're somewhere around #5 or 6 in Asia, and so the market grows, and we continue to grow with that. That's positive. Our platform is actually performing well. We're continuing to win business both in North Asia and Southeast Asia but also now in the Middle East and in the international markets, so the business is doing well. One of the big other boosts we got our business, we saw that when we did the SocGen acquisition 2, 3 years ago. We've seen that also in the ANZ acquisition, that our ability to increase the productivity of the new RMs, the ANZ relationship managers, that's actually been very good. And therefore, in the first countries, we integrated Singapore and Hong Kong. The ANZ RM productivity we've already brought up to the DBS RM productivity level, which is almost a doubling of their productivity at a per RM level, so that's actually been quite helpful as well.
[ Janice, ] you had a question here?
I'm [ Janice ] from [indiscernible] Asia. With regard to the nonperforming assets, it fell compared with the previous quarter, but on a year-on-year basis, it actually rose, so can I just get a sense of what contributed to that? And also, can I just find out why the number of housing -- nonperforming assets for housing loans have increased, but the allowances have remained the same at 7, so just what's the reason for that? Yes.
The first, as you know, we did a pretty aggressive recognition of nonperforming loans in the oil and gas sector in the third quarter of last year. If you remember, we were quite aggressive when we took a lot of loans, which are actually not over 90 days, and we categorized them as nonperforming, and we provided against them. That explains the year-on-year lift in the NPA. But -- and that was widely reported a couple of quarters ago. So the key thing to look at is the quarter-on-quarter, where actually, the NPAs are now coming off. On the housing loans, while there's some pickup in the NPAs, it also reflects a continued pickup in our size of our business. The underlying denominator for business is also increasing. As we pointed out in the last few quarters, our market share has gone up to about 31% from 24%. So the absolute NPA number will obviously go up because the size of the business is going up. But the reason [indiscernible] don't go up is that there really no losses from this business. They become nonperforming, but either because they're well collateralized, our loan to values are low, or the client pays back. You don't have to book any losses against it.
[ Clara?]
[indiscernible] I'd like to ask a macro question. You seem fairly sanguine on the impact of 3 and even 4 U.S. rate rises, but we saw a very agitated week for Indonesia last week. So I wondered if you could give us an idea of how you assess the impact on Indian Indonesia to important market fees, given what we saw back in 2013.
So I think it is possible that we see very volatile markets, and it is quite possible that you'll see weakness in the currency for both those countries, but given the current account and the trade deficits that there are, so that is possible. So you could see some volatility on the currency account. But as you saw in the 2013, it does not materially impact our business. So as there's a macro volatility -- net-net, DBS does very well in rising interest rate environments because our margins improve. And the size of Indonesia and India and overall book is actually not consequential. So even if there's some volatility in those 2 countries, it [ doesn't ] move the needle very much for us. We just do [ somewhat ] better in our core businesses when that happens.
I just wondered in terms of your own assessment, just macro wise, and you're obviously very familiar -- in with both of those countries, do you think they're better prepared or not...?
Actually, I think if you look at the FX reserves in both countries at a country level, they're very robust. I think Indonesia last year saw about 10 months worth of imports in FX reserves. India also has a lot of strong FX reserves. So the countries from a reserve standpoint are pretty well equipped to handle the short-term debt and the consequences of outflows. I don't think you're going to see a macroeconomic risk at a NPA level caused by this. I do think, however, that if you wind up with a weakness in the currencies, then you might see some more portfolio outflows, and you might see a position taking both in equities and fixed-income markets. I think the volatility will be in the markets more than in the underlying economy.
Is there final question [indiscernible]?
Yes. Can I just follow up on [ housing loan ]? So can you give a sense of how new sales are this quarter or...?
New sales are being fairly [indiscernible] our total new bookings in the quarter were about $2.5 billion. Again, they're up on last year, down on the fourth quarter, but they continue to be fairly strong. And they're broad based. There's obviously some amount of resale and refinancing in that as well, but also building under construction has being quite steady.
Okay, if there are no further questions, we'll end early today. Thank you, everyone for coming. See you next quarter.
All right, thank you all.