Do DBS’s third quarter results signal the first stages of a rebound in Singapore banking, and by implication the job market in the sector? Perhaps. DBS posted a 20% year-on-year fall in Q3 net profits to S$1.3bn, as it set aside higher allowances for potential bad loans and lower net interest income.
But there was one statistic that DBS was keen to highlight in its third quarter trading update: a 17% growth in fee income compared with Q2 as “economic activity recovered”. DBS’s Q3 net fee income of S$913m was also the third highest on record.
“The third quarter’s results reflect a recovery in business momentum as regional economies emerge from lockdowns. The rebound in fee income to pre-Covid levels has enabled us to cushion the full impact of lower interest rates,” said DBS CEO Piyush Gupta. “At the same time, the accelerated build-up of allowances has strengthened our ability to meet the challenges of an uneven economic recovery in the coming year. In the longer term, Asia’s fundamentals remain undiminished,” he added.
If you work in wealth management at DBS, you will have enjoyed a particularly strong third quarter. Fee income of S$380m was up 25% quarter-on-quarter, the second-highest quarterly amount ever, as “sales of investment and insurance products increased with improved market sentiment in a low interest rate environment”.
Transaction service and loan-related fees were “in line with average pre-Covid quarterly levels”. By contrast, global banks such as Deutsche have seen their transaction banking revenues fall. Card fees grew 22% quarter-on-quarter “as consumer spending picked up with an easing of lockdowns”, but they remained 21% below a year ago.
While DBS’s trading update doesn’t break out results by division or reveal headcount numbers (it only does this in its full and half-year reports), it provides some broad insights into jobs. Expenses rose 4% from the previous quarter to S$1.54bn due to “Covid-related support for staff as well as non-recurring occupancy costs”. Compared to a year ago, expenses were 5% lower as general expenses, such as for travel and marketing, declined. For the nine months, expenses fell 2% to S$4.58bn. But this decline in general expenses was offset by an increase in base salary costs from a “higher headcount”.
The bank’s headcount went from 28,419 at the end of December 2019 to 28,984 at the end of June this year, a rise of 565 people, according to its H1 financial results. About 20% of the new DBS jobs were for what the firm classifies as “insourced” tech professionals – people who previously worked on DBS tech projects at vendors but are now employed by the bank.
Technology professionals almost certainly account for a much greater proportion of the additions to DBS’s payroll this year, because the firm would have also poached people from competitors. Technology, digital and analytics roles make up 61% of the bank’s current Singapore-based vacancies. Moreover, 360 of the 1,000 new roles that DBS plans to create in Singapore this year are in technology. Gupta made the hiring announcement in mid-May, so many of these vacancies may have been filled by now.
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