DBS Group Holdings Ltd
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DBS Group Holdings Ltd
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Good morning, everyone and welcome to DBS' first quarter results media briefing. As you can see this quarter, we're trying something different. We decided to hold the briefing in this new space that we call the Sparks Studio. So we created this space actually some months back. It has the production facilities, content facilities. So it works as a content studio by day and a communal hub by night. So we thought we would share it with you.
But back to results this morning, we announced a very strong set of results. First quarter net profit up 9%, at SGD 1.65 billion and return on equity at 14% is the highest in a decade.
So with us we have Piyush and Sok Hui to tell us more. Over to you.
Good morning, everyone. First quarter net profit rose 9% from a year ago to a record SGD 1.65 billion as total income increased 6% to a new high of SGD 3.55 billion. Healthy business momentum and net interest margin progression enable earnings to surpass the year ago record quarter. Compared to the previous quarter, a recovery in wealth management fee income and trading income boosted non-interest income. As a result, total Income rose 9% and net profit increased 25%.
The cost to income ratio of 42% was stable from a year ago when we had the benefit of a property disposal gain of SGD 86 million. Asset quality was benign. Non-performing assets were little changed from the previous quarter as new NPA formation remained low. Total allowances were half the level a year ago. Specific allowances declined to 15 basis points of loans. We also had a general allowance write back of SGD 100 million due to improved portfolio quality and better external credit conditions.
The balance sheet was strong. With CET-1, net stable funding ratio and liquidity coverage ratio all comfortably above the regulatory requirements. Return on equity was at 14%. This is higher than our short-term target of approaching 13% and was helped by a general provision write back. Nevertheless, the results demonstrate a sustained trend of ROE progression.
Compared to a year ago, total Income rose 6% or SGD 191 million to SGD 3.55 billion. The growth was led by 9% or SGD 182 million increase in net interest income to SGD 2.31 billion. Net interest margin rose 5 basis points to 1.88%, from higher interest rates in Singapore and Hong Kong. Loans grew 5% or SGD 16 billion in constant currency terms to SGD 347 billion. The growth was led by non-trade corporate loans.
Non-interest income growth was subdued given the high base last year. Net fee income declined 2% or SGD 14 million to SGD 730 million. Wealth management, brokerage and investment banking fees collectively fell 12% due to unusually buoyant market sentiment in first quarter 2018. The decline was offset by a 12% increase in card transaction service and loan related fees. There was also a high base for other non-interest income because of an SGD 86 million property gain last year. The property gain was more than offset by an increase in trading income and gains on investment securities enabling other non-interest income to increase 5% or SGD 23 million to SGD 511 million.
Expenses rose in line with income by 7% or SGD 100 million to SGD 1.5 billion. Profits before allowances increased 5% to SGD 2.05 billion. Total allowances fell SGD 88 million to SGD 76 million, which included the general provision write back of SGD 100 million.
Compared to the previous quarter, total income was 9% or SGD 306 million higher as wealth management fee income and trading income recovered from a weak fourth quarter. Net interest income rose 1% on a day adjusted basis. Loans grew 1% as non-trade corporate loan growth was moderated by a decline in trade loans. Net interest margin rose 1 basis point.
Net fee income was 15% on SGD 95 million higher. The growth was due to a 44% increase in wealth management fees and 20% rise in loan related fees. Other non-interest income was 83% or SGD 231 million higher as trading income doubled. Expenses were stable. The positive jaw resulted in an 18% increase in profits before allowances to SGD 2.05 billion. Total allowances were 2/5 of the previous quarter.
Net interest income of SGD 2.31 billion was 1% higher than the previous quarter on a day adjusted basis. The reported net interest margin rose 1 basis points from the previous quarter to 1.88%. Excluding Treasury markets activities, net interest margin was 5 basis points higher with Singapore, principally accounting for the increase. The margin increase came from higher SIBOR install rates, the repricing of fixed deposit type housing loans as well as a shift from higher cost to lower cost U.S. dollar deposits.
The 5 basis points increase in the commercial book net interest margin was offset by a 4 basis point drag from treasury markets activities. While total treasury markets income was more than 3 times the weak fourth quarter, almost all of the first quarter income was booked as non-interest income resulted in a net interest margin drag.
For the full year, we are maintaining our guidance of mid-single digit net interest margin progression. This is based on the repricing of FD price and fixed rate housing loans and the progressive turnover of fixed rate securities. There could be a modest upside if the recent increase in SIBOR and SOR rates is sustained and if the yield curve stiffens.
We had loan growth of SGD 3 billion or 1% in constant currency terms during the quarter. Non-trade corporate loans rose 3% or SGD 5 billion. The increase was for working capital and due related activities and led by Singapore and Hong Kong corporates across a range of industries. Consumer loans increased 1% or SGD 1 billion, housing loans declined SGD 0.6 billion as new bookings and disbursements in Singapore fell in line with the ongoing slowdown in the residential property market.
Our market share for housing loans in Singapore as at February was unchanged from the previous quarter at 31%. The decline in housing loans was more than offset by an increase in non-housing consumer loans. Trade volumes fell 4% or SGD 2 billion during the quarter due to a general slowdown in regional trade volumes. Loan growth for the past 12 months was 5% or SGD 16 billion in constant currency terms. The growth was predominantly in non-trade corporate loans. We are maintaining our guidance of mid-single digit loan growth for the full year.
Deposits rose 1% or SGD 2 billion in constant currency terms during the quarter to SGD 395 billion. Similar to market trends, the increase was in fixed deposits. The growth in deposits was in line with loan growth and the loan to deposit ratio was unchanged at 88%. Our share of Singapore dollar savings account was unchanged from the previous quarter at 52%.
Our liquidity ratios remain well above regulatory requirements. The liquidity coverage ratio was at 137%, while the net stable funding ratio was at 111%. Gross fee income was SGD 851 million, unchanged from a year ago.
Buoyant market conditions a year ago resulted in a high base for market related activities. A large part of the decline was in brokerage and investment banking fees, which collectively fell 41% or SGD 36 million to SGD 51 million. Wealth management fees decline 5% of SGD 16 million to SGD 315 million with a 13% decline in fees on investment products such as unit trusts moderated by a 9% increase in insurance income. These declines were offset by increases in annuity activities. Card fees rose 21% to SGD 189 million from higher transactions across the region. Transaction service fees grew 6% to SGD 188 million as both trade finance and cash management fees increased. Loan related fees were 9% higher at SGD 108 million.
Compared to the previous quarter gross fee income rose 13%. The increase was led by a 44% increase in wealth management as financial markets recovered. Loan related fees also increased by 20%. Offsetting these increases was a 6% decline and card fees due to seasonal factors. Investment banking and brokerage fees were also lower.
Consumer Banking and Wealth Management. Consumer Banking and Wealth Management total income rose 15% from a year ago to a new high of SGD 1.56 billion. Loan and deposit income grew 28% SGD 925 million as net interest margin improved with high interest rates. Card income 7% to SGD 200 million from higher transactions across the region.
Investment product sales income fell 3% to SGD 421 million as a high base for unit trust and structured product income was moderated by higher insurance income. Income for the Wealth Management customer segment rose 15% to a new high of SGD 760 million as assets under management expanded 11% to SGD 230 billion.
Income from the Retail customer segment also increased 15% to SGD 797 million. Singapore dollar savings deposits fell 1% to SGD 116 billion in line with market trends. Our market share for both Singapore dollar savings deposits and Singapore housing loans were maintained from a year ago at a 52% and 31% respectively.
Institutional Banking. Institutional Banking's total income rose 10% to SGD 1.50 billion. Cash management income grew 45% to SGD 497 million due to new customer mandates and the higher net interest margin. Deposits fell 1% to SGD 133 billion as those with the highest cost were managed out. They were replaced with lower cost deposits from other sources.
Loan income rose 3% to SGD 670 million from growth in non-trade loans. Expenses grew 7% to SGD 472 million. The positive jaw of 3 percentage points resulted in a 1 percentage point improvement in the cost to income ratio to 31%. Profit before allowances was 12% higher at SGD 1.03 billion.
Treasury Markets. Treasury Markets interest and non-interest trading income rose 18% from a year ago to SGD 293 million. It was 3x the record low of SGD 92 million in the previous quarter. The increase was broad based and led by gains in interest rate and credit activities. Due to the nature of the trades, only SGD 12 million of the SGD 293 million in treasury markets income was classified as net interest income. The remaining SGD 281 million was classified as non-interest income. This boosted trading income and resulted in a direct to net interest income and the reported net interest margin.
Treasury customer income for consumer banking and wealth management and institutional banking recovered from the weakness in the previous quarter. The SGD 312 million was in line with the first 3 quarters of last year.
This chart shows the income growth of the 3 business units over the year ago period. The momentum from previous quarters was maintained with the growth of SGD 383 million being faster than most quarters of last year. Treasury Markets recovered from a generally weak performance last year. The goals for Consumer Banking and Institutional Banking was led by net interest income and non-market related non-interest income.
Expenses rose 9% from a year ago to SGD 1.50 billion. The increase was in line with the total income growth resulting in the cost to income ratio maintaining stable compared to a year ago at 42%. We continue to target productivity gains from digitalization and cost management initiatives and expect that the cost income ratio to progressively improve over time.
Hong Kong. Hong Kong had recorded a property gain of SGD 86 million in the first quarter 2018. This chart excludes the property gain to show the underlying performance. Hong Kong achieved a record quarter as earnings rose 3% in constant currency terms to SGD 370 million. Total income rose 9% to SGD 707 million, also a new high. The increase in total income was led by a 15% increase in net interest income to SGD 476 million. Loans grew 8% from non-trade loans to large corporate customers, while deposits rose 5%.
Net interest margin increased 18 basis points to 2.05%. Higher interest rates resulted in a faster repricing of loans and deposits of which 57% were low cost current and savings deposits. Fee incomes fell 8% to SGD 157 million as a decline in wealth management fee from a high base was moderated by an increase in cash management fees. Other non-interest income increased 8% to SGD 74 million from higher trading income.
Expenses rose less than income by 5% to SGD 252 million and a positive jaw resulted in a 10% increase in profit before allowances to SGD 455 million. Total allowances amounted to SGD 6 million as specific allowance charges were partially offset by general allowance write-back. There have been a total allowance write-back of SGD 18 million a year ago.
Non-performing assets were stable from the previous quarter at SGD 5.6 billion. New NPA formation remain low at SGD 109 million. The NPL rate was stable at 1.5%. Specific allowance for loans declined to 15 basis points or SGD 130 million, lower than a general range in recent quarters. We also took SGD 43 million mainly for contingent item.
The expected credit loss for Stage 1 and 2. Our general allowances fell by SGD 100 million during the quarter to SGD 2.47 billion. There was a decline in lower quality exposures in our portfolio during the quarter which reduced the amount of expected credit loss required. At the same time, there was an improvement in external credit conditions based on the models we used for computing expected credit losses.
Regulatory loss allowance reserves, which are required by the MES, if the expected credit loss for Stage 1 and 2 falls short of the 1%, general provision requirement increased by SGD 103 million to SGD 479 million. The amount was transferred from retained earnings.
Our capital ratios remained strong. The Common Equity Tier 1 ratio rose 0.2 percentage points from the previous quarter to 14.1% as retained earnings during the quarter more than offset the impact of a SGD 7 billion increase in risk weighted assets to SGD 297 billion. After the payment of the 2018 final dividend, which was approved by the AGM last Thursday, the CET1 ratio will be closer to our target range of 12.5% to 13.5%. Our leverage ratio of 7.3% was more than twice the regulatory minimum of 3%.
The board declared that from this financial year onwards, we will pay dividend 4x a year instead of 2x. This is to provide shareholders a more regular income streams. For the first quarter, the board has decided a payout of SGD 0.30 a share. This is consistent with the full year dividend of SGD 1.20 per share for financial year 2018.
The first quarter dividend is scheduled to be paid on 31st May. The fourth quarter 2018 dividend of SGD 0.60 per share will be paid on 17th of May. So for shareholders, in total, they will receive SGD 0.90 per share for the month of May. A policy of paying sustainable dividend that progressively rise in line with earnings remains unchanged.
We achieved record earnings and sustained ROE progression during the quarter. The performance demonstrates the continued improvement in the profitability of our franchise as a result of digitalization, a shift towards higher returns businesses and more nimble execution.
Business momentum was healthy during the quarter. In addition, non-interest income recovered from the previous quarter's weakness to levels more in line with earlier periods. Our pipeline for non-trade corporate loans and for investment banking mandates is strong. Asset quality continues to be benign. Compared to 6 months ago the outlook has improved. We remain well placed to continue capitalizing on the region's long-term growth prospects and delivering healthy shareholder returns.
Thank you for your attention. I will now hand you over to Piyush.
Okay, thanks. Thanks, Sok Hui. So I'll just make a few observations and then we will go into Q&A. Turn the slide please. So the first is, the business momentum is actually relatively strong. I think it's consistent with what you are seeing in the macroeconomic data. China came in at 6.4 stronger than expected. The U.S. came in stronger than expected.
And while PMIs were slow through the fourth quarter and early in the year, the March PMIs, generally across the region, have been on the uptick. And that you can see in the underlying nature of our business. Our non-trade corporate loan growth actually grew by about SGD 7 billion. And that net of repayments and so on, we got effectively a SGD 4-odd billion pickup. That's very healthy. And that's very consistent with the pace you see in -- on a sustained basis.
Outside of the lending book, the non-lending income also is quite robust. Wealth management bounced back after a week fourth quarter. Capital markets have been slow in the first quarter, but again opened up, so the debt capital markets in the last few weeks have been much stronger. And so by and large, I think, business momentum, I am relatively sanguine about, with effectively 1 caveat. And the caveat is Singapore property market -- Singapore mortgage market.
For the first time in a long, long time, we actually saw a reduction or shrinkage in our mortgage loan book in the first quarter. Our bookings continue to be soft and the amount of refinancing transactions in the market are actually very low. They are about half of what they were a year ago. So that spilled over into our mortgage book.
I'd earlier guided that we thought mortgage book will go between SGD 1.5 billion and SGD 2 billion this year. I don't think we'll get much more that a SGD 1 billion to SGD 1.5 billion because we didn't have to make up for the reduction in the first quarter and then grow after that. Now, there is some decent pipelines of BUC and so on. So I do think we'll wind up with a positive number. But it would probably be a SGD 1 billion-SGD 1.5 billion in that kind of range. But ex that, overall, business momentum continues to be generally robust across the region.
The second comment is on NIM. As Sok Hui showed you, our commercial bank NIM has actually been quite strong. So we can go to the next slide please, I'll come back to this one. So this is the NIM chart Sok Hui showed you. If you look at the commercial bank NIM on top, it's been growing quite steadily from 2 percentage points to 2.15% year-on-year, and the even in the quarter it's up by 5%.
Now this marks one more thing. I saw some of the analysts' comments or questions on -- the interest income was somewhat subdued. Part of that is explained by an accounting change because from this quarter, we started actually capitalizing our rental payments under IFRS 16. And the impact of that is, we've added a couple of billion dollars to our asset book for rentals in the future and that actually causes a 1 basis point drag on the NIM -- the funding cost of that asset that we create. So actually ex that, we are -- not only would our commercial bank NIM be 1 basis point more, even the total NIM would have been another basis point, 189 is to 188, if it wasn't for that accounting difference. So the underlying NIM, therefore, if you actually look at it apples-to-apples was indeed very strong.
What's interesting, though, is that T&M (sic) [ TM ] NIM has been coming down. We can see there is the gray lines on top of this chart and that's explained by couple of factors. One, obviously, the yield curve has been flattening over the course of the last year. The ability to run the carry trade, to make money on the gapping, that's come off a bit. But in this quarter, in particular, we wound up putting on a lot of trades, we benefited from the credit margins coming down from equity price rebound, et cetera. But it all showed up in the non-interest income line and not in the interest income line.
So I do think as we go forward, our NIMs will continue to be strong. SIBOR/SOR is up about 1 percentage point over the year. I think there might be some scope for that coming down a wee bit, but on the other hand, I think the TM NIM is bottomed out. And I think you'll probably see some uptick in the TM NIM. Therefore, on balance, our original guidance of being able to get mid-single digit NIM, I think we will maintain. We might even actually 10 to 5-6 basis points rather than 4-5 basis points through the course of the year.
Can you go back to the previous slide? Our expenses have been well controlled. Our cost to income ratio is back to 42%. And obviously that's been helped by a strong income line. But overall, our expense growth is being well managed, 7%. If you exclude the property gain from last year, our income growth is about 8.5%, 9%, so we have very healthy, positive jaws for the quarter.
And finally, a quick note on the credit environment. The credit environment, actually from our standpoint, is looking very benign. Sok Hui pointed out that new NPA formation is low. We're not seeing too much of weakness in the portfolio. We're not seeing a lot of spin over to NPAs. While we put on some amount of SPs -- if we look at the SPs related to the new NPAs, they are de minimis. And therefore, most of the SP increases, we went back to the old portfolio and bumped up our provision just to be abundantly conservative in terms of the SPs that we have. At this stage, I think, we are more than adequately provided for any of the NIMs, which are in non-performing -- the non-performing category. And for my money, I think we'll probably likely doing some recoveries over the course of the next year or 2.
The other point on the allowances what Sok Hui pointed out is the ECL. As you know, ECL is the new general provision. Now, in the past, general provision was easy. You took the asset base and you applied 1 percentage point to it or something and you put it into general provision. Today, because of the change in the accounting rules, you can't do that anymore. And so, you have Stage 1 and Stage 2.
Stage 1 is, on all your portfolio, including the good portfolio, you have to keep some reserve. Stage 2 is on the portfolio, which is a little weaker you got to keep some extra reserves. You got to do not just point in time through-cycle assessment of how much you might be able to take and then you keep reserves against that.
Now -- on the basis of that, the Stage 1 and Stage 2, our total ECL came down by SGD 100 million, and it came down partly because, our weaker credit portfolio has reduced. We've actually been able to get some payments in the portfolio, and in some cases, we got collateral against the portfolio. So the amount of reserves you have to keep in Stage 2 against that has come down.
The other thing that happens in ECL is you have to make a prediction of economic cycle and where you are, and we use a model. According to the model, that model apart from everything else looks at the general environment. The general environment in the fourth quarter was far more pessimistic than in the first quarter. So that gave us a lift from that as well.
Nevertheless, just to be abundantly careful, we had our external auditors benchmark our total ECL to the world. And it's quite clear that our ECL is very conservative. We're one of the most conservative in the world if you were to compare our ECL as a percentage of our assets or RW et cetera. So net-net, long story, but the credit environment is looking good. And I don't anticipate a significant deterioration in anything that we can see.
Slide. So where are we in terms of the outlook? And so not too dissimilar from the outlook we gave you at the end of last year, beginning of this year. I think the macroeconomics situation is somewhat stabilized. I think China's stimulus in fiscal and monetary policies have indeed put a little bit of a cushion under the overall macroeconomic situation. The -- so our guidance on getting mid-single digit loan growth, that's in place. I think we should be able to do that.
I think NIMs will continue to progress. As we've indicated before, the benefit of all the rate increases from last year has still has not flowed through our portfolio, so some of that will continue to flow in. Because business momentum is good, we think the high-single digit top line growth, we think, we should be able to get. We'd guided for cost-income ratio of 43%, they're still on target.
The SPs as I've indicated earlier set through-cycle average because I wasn't sure how bad the situation in China could be. The way things are now, I think, we'll get below the through-cycle average. So I don't think we'll hit the through-cycle average. And which means that our ROE should continue to improve from last year. Sok Hui said 14% was unusual this year, partly because of trading gains and the GP reversal, and so I don't think we'll get 14%. But our guidance on approaching 13%, I think we should be able to deliver.
Happy to take questions.
[Operator Instructions] [ Siang Ng ] you have the question?
I just pick up on your Singapore mortgage book. This morning, you are published report that says, Singapore home purchases up 16% in the first quarter from a year ago. But you mentioned a bit low transactions. Are you missing on something on the increase?
Well, our market share is holding flat. So because the market share is at the end of February, so our market share is holding flat. So we obviously not missing on anything because, the Central Bank data shows that market share. But I think a lot of the refinancing, so -- if you think about the nature of the property market in Singapore, there is building under construction, new property development, and there is refinancing. The last data you saw the total number of refinancing transactions, they're down from about 4,000 to 2,000. So there's 50% drop in the transaction in the market.
Just if you could elaborate on the mortgage booking. You said you saw lot of shrinkage in the mortgage book. What do you mean by shrinkage? Half the booking from a year ago?
No, no, no. The actual -- our assets -- mortgage assets reduced by about $0.5 billion, so the reduction in the book.
Because the -- people have paid off the loans and new booking are not...
Loans keep coming down. Correct. So people are paying down the loans and new bookings are not coming in as the -- so the overall book...
$0.5 billion shrinkage.
That's correct.
But you did say -- was it booking this half of what it was from a year ago as well, did you say that?
So both. So what happens is that -- see the way the mortgage book functions is the book keeps reducing because, people keep paying their loan. So you go to replace that by new people booking loans. If the new people booking loans are not booking fast enough, then the shrinkage becomes more than the new bookings. That's what happened.
But you still expect?
I think on a full year basis we'll go up because the pipeline is looking better for the next 3 quarters. So I do think we'll be up at the end of the year, but the first quarter was down.
I also want to find out the -- last week you -- DBS said that it was not going to do any more new co-projects, but will honor existing commitments. What is the value of all the loans up to 2021?
I don't have the number -- of the value of all the loans up to 2021.
Not much has changed from -- when you gave the outlook last year and even start of the year. But what's the major risk? Is there any risk apart from the property market you mentioned? Is any other risk to you are forecasting in general to the business pipeline?
The major risk if you ask me is a steep collapse in the interest rate environment. If it turns out that the fed actually starts cutting rates this year, and they start getting worried. And that spills over -- flows over to the interest rate outlooks across the region, then that obviously would drive a detrimental impact on our NIM. I don't foresee that happening. I think the fed is more likely to hold rates where they are and you probably won't see a cut till 2020. But if that were to happen, that would be a risk to our [ total ].
And just in terms of the U.S./China trade war, you'd earlier also said the impact is -- there's not too much of an impact but you need to keep up on this. Any comments on that, how that's...
I still think that's probably true. I said that in this immediate short term, we are probably unlikely to see any significant reduction in trade volume, the shift in supply chain because not that easy to move supply chains around. What I'm seeing is that, as you look into the medium term, you'll start seeing some of the supply chain shifting, and that is indeed the case.
Many clients are looking or putting the next investment into other countries. But as we had forecast, much of that investment is going in the region. So people are looking at Thailand, Malaysia, Vietnam, Indonesia, India, these 5 countries I'm hearing a lot of investment flow going into the next new investment. That plays to us -- that plays to our strengths and allows us to actually dimidiate some of the businesses, in some cases even better than if they were in China. So don't anticipate an issue from that.
The longer-term issue is obviously how much does it go beyond trade? And does it wind up creating other kinds of Cold War kinds of issues between a China world and a non-China world? And right now from the nature of the dialogue and the conversations going on between China and U.S., it doesn't seem to be headed that way. The dialogue is -- have to be productive.
Kevin?
Kevin from Nikkei Markets. Right now I think provisions you have to follow certain formulas. But let's say using the older formula just to -- which is to some extent it's based on gut feel. Will your positions have been higher?
No, they'll be about the same.
And so we --
There is always a general provisions. And specific provision, we still do the same say. General provision are about the same.
[ Alisha ]
Can you elaborate on the NIM? You said that the scope for that may come down over the year. I mean, SIBOR and SOR could come down. But yet, you're still expecting NIM to go up slightly.
Like I said, the way our book functions is that only about 40%-45% of our books -- especially housing book reprices immediately. And so if your loan is linked to SIBOR it goes immediately, when SIBOR changes your loan price changes. But then there's another part of the book, 45% reprices over time that is actually our fixed rate loan. And now even if the SIBOR goes up, I can't change the rate. But when the loan matures and the new loan comes up, then the rate goes up. So there's a lagged effect of the increase of rates on our book.
In fact, roughly speaking, about 60% of all rate increases go through in the first year and then 40% of rate increases go through in year 2 and year 3. So all of the 7 hikes from the fed and the 1% increase in SIBOR between last year and this year, a lot of that has not flowed through our book yet. So that will flow through a book in the course of the next few quarters.
So you expect it to go up from 1.88% to how much?
We'd given guidance earlier that we expect to be able to get about 5 basis point lift. Our average last year was 1.85%. And so if you say 5 basis points than the average this year should be around 1.90%.
But you're showing strong increase in the underlying NIM for the corporate -- the Treasury Markets and --
Not Treasury Market for the commercial book.
For the commercial, isn't that very competitive -- just to able to get an increase in the NIM there?
I'd explain it, right. So the reason you get [ extra ] NIM because the SIBOR goes up -- everybody prices of SIBOR. The fixed date was grew up, so it just tends to flow. And so if I have a loan which has been mature and it only matures in the middle of this year, then -- and it's a fixed rate loan, then the pricing is the old pricing till the middle of this middle of this year. But this year, it goes to the new price. So that's why there's a lagged effect and that shows. The other thing we've been able to do is also obviously improve the quality of our funding mix. So we've reduced the cost of funding as this has happened thus as a result.
Jamie.
Can I get a sense of your strategy in terms of wealth management. Particularly factoring the Chinese wealth, a lot of the flow through is obviously coming through Hong Kong were they're doing a lot of IPOs and that's where the Chinese offshore wealth in effect is. What does this mean for Singapore as an offshore wealth booking center, not just for the Chinese wealth, but also for ASEAN wealth? I mean, Indonesia is also coming up. I think there is -- there are more initiatives to keep a lot of domestic wealth domestic. So does that impact your strategy?
Actually, we find that Singapore continues to be a preferred center for anybody who wants to manage the wealth internationally. And we're really not seeing what you're suggesting that people are stopping using Singapore and going to other locations for wealth management.
I think, the strengths and advantages of Singapore are quite consistent -- stable country, AAA country, rule of law, large financial system. So we continue to see a lot of inflows into the region, including from North Asia, including from countries in North -- frankly, including from Hong Kong itself. So there are lot of people who much rather not manage their money in Hong Kong, but rather manage their money in Singapore for obvious reasons, so we see that. We're also seeing this too from other parts of the world. So Singapore does continue to attract money.
As you know, because we're quite disciplined, partly because of our own business agenda and partly because the regulatory supervision, so we are quite disciplined about the nature and kind of money we accept. If we weren't, you would expect to see even more inflows into Singapore, so we're quite judicious about what comes in. But it is still very strong.
[ Tania ]
Your annual AUM went up 11% to SGD 220 million. Could you share that out of the 11% what's the majority was coming from?
So actually the majority of the AUM lift, for us and everybody else, is not new money so much, but revaluation of assets because prices went up, so your assets under management go up. But all our money which is coming and our growth is actually broad based. It is in the ultra-high network. It is in the TPC, the middle segment, it is in the mass affluent and it is broad based. We continue to get money from the North Asia from Southeast Asia and from international market, so it's very diversified.
[indiscernible]
We have about -- no, I told you net new money for the quarters was about $1 billion.
Are there any further questions? Okay.
One question just more housekeeping. So the $100 million write back was because of the way you calculated the ECL was Stage 1 and 2, that's right -- it wasn't from a specific testing company -- nothing specific? And the other point is because of the way you've classified your non-interest income and interest income, all the gains from the gapping went into non-interest income. Is that is that right?
Anything else?
So last year, what's the growth in Singapore market book? Because this year you expect 1.5 max, last year what was it?
It is under 2.
Under 2. [indiscernible]
Almost.
Almost [ saturate ].
Well, our normal growth -- if you go over the year before that, our growth was about 3.5 to 4 -- right -- about 4. So last year it came down by half to about 2, right? And this year, if it comes in at 1 to 1.5, I would be half over of last year again.
Is it lowest for -- years?
It's certainly the lowest in the number of years. Now I don't -- I haven't gone back and checked when it was lowest. Certainly, a negative quarter, the first time in many, many years.
[indiscernible]
Absolutely.
Okay, if that's all the questions we have for this quarter, we'll wrap up the briefing. Before we let you go, just one [ plug ] for the upcoming DBS Marina Regatta that is happening from May 31 to 2nd June. Doing an extra [ plug ] because this year, the MR is slightly different -- sustainability theme, so everything at MR is going green, whether it's the solar panels to the giant interactive games to the usable crockery, everything is going to be green. So we look forward to seeing you there. With that, thank you for coming today.
All right, thank you all.