Good morning and a very warm welcome to VBS' Q1 2021 Financial Results Briefing. This morning, we announced that our Q1 2021 net profit doubled from the previous quarter and rose 72% from a year ago to RMB2.01 billion. This marks the first time that quarterly earnings have crossed the RMB2 billion mark. So some housekeeping before we begin. There will be 2 sets of slides accompanying the briefing today.
Both the CFO and CEO presentation can be accessed from the DBS Investor Relations page. To take us through the numbers, we have with us our CEO, Pirish Gupta and our CFO, Chung Sock Hui. I'll hand the time now to Sock Hui. Sock Hui? Thank
you. Good morning, everyone. We start with Slide 2. We delivered a record performance as quarterly net profit crossed CNY2 1,000,000,000 for the first time in our history, doubling from the quarter before and increasing 72% from a year ago. Business momentum was strong and broad based.
Loans grew 3% from the previous quarter, boosting net interest income 2% on a day adjusted basis. Net interest income net interest margin was stable. Fee income rose 15% from a year ago to a record with wealth management fees and transaction service fees at new highs. Treasury markets and treasury customer income were also at record levels. The broad based business momentum mitigated the impact of lower interest rates.
Expenses rose 2% from a year ago to 1 point 59,000,000,000 due to the inclusion of Lakshmi Village Bank. Asset quality was healthy with non performing asset formation and specific allowances at pre pandemic levels. The stabilizing asset quality resulted in a general allowance write back of RMB190 1,000,000. Non performing assets were 2% lower than the previous quarter. The NPL rate was 1.5% and specific provisions were 21 basis points of loans.
General allowance reserves remained prudent at RMB 4,130,000,000. There was a KRW 1,000,000,000 or 31 percent above MAS minimum requirements and KRW 1,300,000,000 above the amount eligible for consideration as Tier 2 Capital. Total allowance coverage was 109% or 203% after taking collateral into account. Liquidity remained ample as deposits rose 2% due to current and savings account inflows. This was similar to recent quarters with Casa rising to account for 74% of deposits.
The liquidity coverage ratio and net stable funding ratio were 136% and 127%, respectively. Capital was healthy with the CET1 ratio at 14.3%, well above the group's target operating range. The leverage ratio of 6.7% was more than twice the regulatory requirement of 3%. The Board declared a 1st quarter dividend of $0.18 per share in line with Amiens' guidance for banks to moderate dividends. Slide 3.
Net profit rose 72% from a year ago to $2,010,000,000 the first time in our history quarterly earnings crossed the $2,000,000,000 mark. Total income was 4% lower at $3,850,000,000 as strong business momentum was more than offset by the impact of lower interest rates. Had net interest margin been stable, total income would have risen 9%. Net interest income fell 15% or RMB375,000,000 to RMB 2,110,000,000. The decline was due to a 37 basis point fall in net interest margin to 1.49% from global interest rate cuts in the Q1 of last year.
Fees rose 15% or RMB 121,000,000 to a new high of RMB953,000,000 Record fees from wealth management and transaction services as well as higher investment banking fees more than offset declines in loan related fees and card fees. Other income increased 12% or $82,000,000 to $794,000,000 Trading income doubled as treasury markets non interest income and treasury customer income rose to new highs. Investment gains fell from a high base. Expenses were 2% or $31,000,000 higher at $1,590,000,000 due to the integration of Lakshmani Village Bank. Stabilizing asset quality resulted in a general allowance write back of RMB119,000,000 compared to the RMB703,000,000 that was set aside a year ago.
Specific provisions were RMB 183,000,000 lower at $200,000,000 Slide 4. Net interest income was $2,110,000,000 2 percent higher than the previous quarter after adjusting for the shorter day count. The increase was due to constant currency loan growth of 3%. Net interest margin was unchanged at 1.49% after 3 successive quarters of decline as loan repricing slowed. Compared to a year ago, net interest income fell 15%.
The impact of a 37 basis points decline in net interest margin due to global interest rate cuts was moderated by loan growth of 7%. We have guided for 2021 full year net interest margin to be between 1.45% and 1.50%. Slide 5, gross loans increased 3% or $12,000,000,000 over the quarter to $393,000,000,000 Growth accelerated and broadened compared to previous quarters. Non trade corporate loans rose 2% similar to the quarterly run rate in 2020. The growth of spot base across the region and across a range of industries.
Trade loans grew 6% as market demand improved and commodity prices rose. This reversed the decline in most quarters of 2020. Housing loans were 1% higher and strong momentum continued. This was the 2nd successive quarter of growth following declines in 2nd and third quarter of 2020. The growth was the result of strong bookings in the second half of last year, which continued into the current quarter.
Wealth Management loans were also higher from healthy investor risk appetite and strong market sentiment. Compared to a year ago, loans grew 7% led by non trade corporate loans. Slide 6, deposits increased to $478,000,000,000 over the quarter, up 2% in constant currency terms. As in recent quarter, the growth was due to current and savings accounts, which enabled higher cost fixed deposits to be let go. CASA grew 4% or RMB 14,000,000,000 to comprise 74% of customer deposits, a 1 percentage point improvement from the previous quarter and a 16 percentage point improvement from a year ago.
Fixed deposits fell 3% or RMB 4,000,000,000 continuing the previous quarter's declining trend. Faster than growth faster loan growth than deposit growth resulted in the loan deposit ratio rising 1 percentage point to 81% after 2 successive quarters of decline. Liquidity was ample with a liquidity coverage ratio at 136% and a net stable funding ratio at 127%. Slide 7. From this quarter, fees, which is a small component of total fees income, has been reclassified into transaction services and wealth management to better reflect the business operating model.
Gross fees rose 13% from the previous record a year ago to a new high of $1,090,000,000 Record wealth management and transaction service fees as well as higher investment banking fees more than offset declines in card fees and loan related fees. Wealth management fees rose 24% to a record $519,000,000 Strong investor sentiment amidst the low interest rate environment drove demand across a wide range of investment products. Bank Assurance fees were also higher, reversing declines throughout 2020. A further $168,000,000 of wealth management income is captured under trading income as these are structured in house. Transaction service fees increased 10% to a new high of $230,000,000 as trade finance, cash management and institutional brokerage fees grew.
Investment banking fees increased 36 percent to CNY 49,000,000 from higher equity and fixed income capital market activity. Card fees were only 2% lower at CNY 169,000,000 as consumer spending continued to recover towards pre pandemic levels and digital transactions accelerated. These partially made up for travel spending, which remained low. Gross fees increased 25% from the previous quarter. The growth was also broad based with card fees the exception due to seasonal factors.
Slide 8, expenses. Expenses were stable from the previous quarter and 2% higher than a year ago at 1 point 59,000,000,000 due to the integration with Lakshmi Billings Bank. Excluding LV Bank, costs were stable as higher bonus accruals in line with the better financial performance were offset by lower non staff costs. Expenses were unchanged from the previous quarter. The cost to income ratio was 41%.
Slide 9. Asset quality was healthy as delinquencies for both corporate and consumer segments continued be low despite the tapering of loan moratorium. New non performing asset formation was at half the quarterly average for 2020 and in line with pre pandemic levels. NPL formation was more than offset by write offs and recoveries. As a result, non performing assets declined 2% from the previous quarter to RMB 6,590,000,000.
The NPL rate was 1.5%, slightly lower than the previous quarter. Slide 10. The stabilizing asset quality resulted in lower specific provisions. Specific allowances for credit exposures fell to $199,000,000 or 21 basis points of loans compared to 31 basis points for full year 2020 and in line with pre pandemic levels. Slide 11, General allowances reserves declined 4% from the previous quarter due to write backs resulting from improvements in portfolio quality.
General allowance reserves remained prudent at RMB 4,130,000,000 which were RMB 1,000,000,000 or 31 percent above MAS minimum requirements. They also exceeded the amount eligible for Tier 2 capital by RMB 1,300,000,000, which acts as a buffer for the total capital adequacy ratio. Allowance coverage was at 109%. When collateral was considered, allowance coverage was at 203%. Slide 12.
Capital continued to be healthy. The common equity Tier 1 ratio rose 0.4 percentage points from the previous quarter to 14.3%. Profit accretion and a methodology refinement for market risk rated assets were partially offset by increase in credit risk rated assets. The CET1 ratio was above the group's target operating range of between 12% 13.5%. The leverage ratio of 6.7% was more than twice the regulatory minimum regulatory requirement of 3%.
Slide 13. The Board declared a dividend of $0.18 per share for the Q1. This was in line with MAS guidance for local bank to moderate dividends for 4 quarters starting from the Q2 of 2020. The scrip dividend scheme will be applicable to the Q1 dividend. Scrip dividend will be issued at the average of the closing prices of the 10th 11th May 2021.
Based on Yesle's closing share price and assuming the dividends are held at $0.18 per quarter, the annualized dividend yield is 2.4%. Slide 14. In summary, the Q1 was extraordinary with all businesses recording strong growth. Loan growth accelerated, CASA growth was sustained, while fee income and treasury income both reached new highs. We remain disciplined on costs, which were stable from a year ago, excluding Luxury Village Bank.
Asset quality stabilized resulting in a general allowance writeback. The global economic rebound is strengthening and we are bullish about prospects for the coming year. Our franchise has been enhanced by new growth platforms. This quarter, we announced stakes in Shenzhen Rural Commercial Bank and in Patio to develop blockchain based cross border clearing and settlement technology. These follow the amalgamation of Lakshmi Vilas Bank, our announcement of the China Securities Joint Venture and the launch of the digital exchange announced in the last quarter.
We are well placed to continue supporting customers and delivering shareholder returns as the economic recovery takes hold. Thank you for your attention, and I will now pass you to Tish.
All right. Thanks, Sakkui. So let me get to my presentation. As you said, you can find it also on our website. And if we start off with Page 2, I'm not going to go through all of this, as we just said it, but I'd like to keep it as a bit of a golden quarter for us.
And just a couple of the loan growth is really broad based. The non corporate lending has been consistent now for a couple of quarters. That was good. But for the first time in several quarters, trade kicked in. And that's partly reflecting the improved commodity prices, but partly the overall imports and exports in our client base at least was strong.
So that was helpful. Housing loans continue to be strong. Bookings for the Q1 were also strong, almost at a record level. So I see that continue to be an area of good momentum. And wealth management lending also continue to grow quite nicely, accompanying all of the activity in the market.
So broad based loan growth. The other thing that I'd call out is the activity in Investment Banking. Last year, DCM, fixed income was generally consistently strong, but ECM was very weak for us. Q1, actually both DCM and ECM picked in. And actually, our pipelines on both are looking very good.
So the fee income was and Investment Banking was quite broad based. And in treasury, I just want to call out that while trading obviously was a fantastic quarter for us as for many other banks, but the customer business in treasury was also very strong. We're up 12% all in the consumer space, 15% in the corporate space. And so there's a lot of activity all around. And frankly, this I'll talk about it in the next slide.
It reflects not only an improvement in market condition, but I'd say I think some improvement structurally in the nature of our businesses overall. So without spending more time and looking back, generally, we had a very strong quarter from all accounts on the business side. I think what's more relevant is the next slide, Slide 3. As I see the situation right now, I think the prospects for the macro economy are actually looking reasonably good. We saw the U.
S. Data yesterday, 6.4% Q1 annualized. We saw China year on year at 18%. Most of our countries, we're seeing strong growth. Even India, notwithstanding the 2nd stage of the pandemic, I think will come through quite strong.
I think India will give up 2, 3 percentage points relative to our forecast 2 months ago, but we are forecasting 12, and I think maybe we'll come in closer to 9% than 12%. But there will still be a nice bounce back from last year's negative 7%. So we think generally sustained growth, and we're seeing it across sectors. In fact, we don't have any sector bias. I talked about we can see this quite broad based.
Our loan growth reflects that. Last year, it was concentrated in TMT and real estate. This year, it's extended to multiple sectors. So clearly, that will be good. I said last year, the loan growth is likely to be mid single digits 4%, 5%.
We grew 4% now for 2 years in a row. But just based on the momentum in the Q1 and the pipeline we're seeing, we think we could get to the higher single digits into mid single digits. Fee income, I think, will continue to be robust. I guided earlier for double digits. I think we will do 15% Q1.
I think we should be able to continue doing double digits. Wealth management obviously moves a little bit up and down based on what the markets are doing. Nonetheless, the underlying there are some structural improvements in our wealth offering. 1, we were pushing this democratizing wealth idea, which is offering wealth management products into the retirement planning base. And that's continued to do quite well.
At the end of the Q1, we had about $800,000,000 in AUM from our retail digital portfolio and our regular savings plan. That's almost 15%, 20% of the wealth product income today. So that's quite steady. We're also seeing upside from the digital take up of our wealth products. In the Q1, whether it was equity or unit trust, the people using digital platform to take with us grew substantially higher than the offline.
So I think that's not the structure. I think that will stay. And finally, we've continued to change and bring some more annuity product streams like our discretionary portfolio as well as our barbell account, etcetera. So we call these core products. And the core products have doubled in the course of the last 12 months.
So that gives us a slightly better degree of resiliency in the wealth management of pre income sales. Having said that, all of this still can get overturned as the market turns out. But net net, I'm relatively optimistic about this. The other area where we see structured improvement is in treasury markets and the customer side. Obviously, we're helped by the market, the markets have generally kind.
But on the customer piece of the income, again, the 3 areas that our efforts over the last year or so are paying dividend. And that's also to do with transformation and digitization. One is in the distribution setup. I've indicated before that we've been distributing our treasury products into our customer base more and more electronically and in fact more and more embedded whether into our payments products, into our APIs, into various other forms. So that's helping.
We're getting good volume growth from there. The second is use of data. We've been increasingly being able to use analytics and data mining to target customers better. So I think that's helping. And finally, we've also been doing a lot more of algo, an AI driven algo and trading both the sentiment and for trading our positioning on both.
So I think structurally, in the past, we used to say that our TNM business is good for about $225,000,000 a quarter. I think the structure changes in the business will be probably closer to $250,000,000 a quarter now. And of course, the Q1 was exceptional. It was double that. But I do think there's some structure changes in treasury, which are helping as well.
The outlook on expenses, Lakshmi, Vilas is obviously just an add on. So that's about a couple of percentage points of growth. But ex Lakshmi, Vilas, we will see some pickup in expenses partly to support the much stronger business activity that we've not predicted. Partly, I think we're going to see some more wage pressure. So our bonuses will have to go up and some wage adjustments are likely to be made.
But net net, we think our costs and so therefore would probably be 3 to 4 percentage points up over the 2019 level, which is what we were using as a benchmark and base mark. If we go to Slide 4, the outlook on the asset quality is also looking very encouraging. As Sakvi pointed out, our overall portfolio in the Q1 surprised on the upside. Our delinquencies are staying really low. If you look at the various moratoriums, the housing loan moratorium in Singapore, out of the $5,000,000,000 most of that is now come back to regular, I think there's some $300,000,000 odd customers.
That's $500,000,000 which has got extended moratorium, but the delinquencies in that are negligible. If you look at the SME book in Singapore, again, we started with about $5,000,000,000 in moratorium. That was down to about $1,000,000,000 at the year end. Another $700,000,000 came off moratorium at the end of the first quarter. And we only have 4 weeks of data, but in the 4 weeks, we're not seeing any significant pickup in delinquencies in that $700,000,000 So what's left in moratorium is now about $400,000,000 which will come off in the end of June.
But so far, I'm encouraged. We're not seeing the pickup in delinquencies and cost of credit in these loans coming off moratoriums in the SME space in Singapore. If you look at the other piece in Singapore, we obviously have another $5,000,000,000 out of the government supported programs that ESG knows. And again, our risk on that is only 10%. The government has 90% of the trade.
That with the future and that is still remains to be seen. Half of those the customers are paying principal and interest, half of them are only paying interest. We only know in the second half of the year what the delinquencies on that portfolio look like. But like I said, it's 90% government backed. Finally, the moratoriums we had the biggest moratorium chunk was in Hong Kong, where we had about $6,500,000,000 At year end, that was down to about $3,000,000,000 and change.
Now it's down to about $2,800,000,000 Of that, a chunk of that is large corporate, I'm reasonably okay with that. But about a couple of $1,000,000,000 of that is SME. There, the outlook is going to be unclear for a longer period of time because the Hong Kong authorities have extended the moratorium now into well into 2022. And therefore, that part of the book, we just have to keep an eye out and watch. But nevertheless, when you put all of that together, it's quite clear that the delinquencies in all of these portfolios are not coming at anywhere near the levels that we thought they might.
And so there might be some upside on that. 2nd, the new NPA formation is very low. Like I said, across the board, we're seeing pickup in economic activity across sectors. And so we're not seeing a deterioration in our NPAs. And so that's actually quite good.
As you noticed that from an allowance standpoint, we saw a significant reversal in our general provisions. Now our general provision, which is $4,000,000,000 comprised 2 things. A chunk of it the largest chunk of it comes from our models. And then there is another smaller component that was what we call a management only that was for things that we thought the model wouldn't pick up like the moratorium, etcetera. The reverses in the Q1 have all come from the model.
So we've actually not had to dip into the extra money, extra reserves we've kept aside. We just continue to see what happens to the moratorium before we touch that. But the improvement in the model and the results just show that overall the portfolio is improving. The improvement came from both. They came from an upgrade of names.
So some names which we thought were going to be weak have actually improved. They came from a repayment of some monies. I think many companies have been able to raise money in the bond market. So some of our exposures got down and paid back. In the consumer space, they came from an improvement in the flow rate.
So overall, the reversal in GP just reflects an improvement in the portfolio quality. And as we see looking ahead, I mean, I've said full year allowance is likely to be below $1,000,000,000 We guided about $1,000,000,000 earlier. I think I'm pretty confident it will be below that. How much below that is still difficult to say. But like I said, overall, it's looking relatively promising.
All right. I want to shift to second theme, not just the outlook and results. But somewhere in the early part of the pandemic in the summer, we decided that there might be an opportunity for us to do a few things to help us emerge stronger from the pandemic. See if you could use the pandemic to reposition the bank and gain some opportunities for the future. And we've actually got a dozen different things that we're trying to do.
But broadly speaking, they fall into these 3 categories. 1, we figured this is an opportunity to look for some inorganic expansion. We said before that we're always open to bolt on deals if we think they make sense. 2nd, we figured that this is an opportunity for us to build some new lines of business. And this is principally leveraging our technology capabilities.
It's been quite interesting to me over the last year or 2 how many people are willing to come coming to us and asking us to leverage the technology capabilities we built in the last 5, 6 years. And we figured there's an opportunity to try and monetize some of this. More generally, I'm convinced that a big opportunity is to be part of the new digital infrastructures that are going to come into place as the world progresses down this digital trend. I sometimes think people often joke about this. We think about the gold rush.
The people who made the most money in the gold rush were not the gold miners. They were the people who sold the picks and the shovels. I think there's an opportunity really for somebody with good technology capabilities to provide the infrastructure and the picks and the shovels of the New World. And that's what we're trying to do as we think about the new businesses that we can leverage and build. And third, obviously, we figured out that again given our digital strength, there are some businesses that we could step on and accelerate.
Now in this slide, I've listed some of the things that we've already announced. There's some that we haven't. I'm going to I have a slide each in the first five, but let me just quickly touch on retail wealth and supply chain because I don't have a slide on those. Retail wealth I spoke about earlier. This is a Robinhood phenomenon to my mind.
Given the mass take up of wealth products in the mass market, if you have the right digital platforms and the right digital product suite, I think you can do well. We've doubled down on this. And as I said before, today, 15% to 20% of our wealth products are already going into this base. So I'm actually quite pleased with that. We are going to continue to push on that.
On supply chain, I've talked about before. People are digitizing the supply chain. The fact that we have all of these API protocols and we have a very efficient ability to plug into whether the anchor driven supply chains or industry supply chains or platform level supply chains, that's proving to be very beneficial. It's helping us drive significant volume in our cash and trade businesses and our flow activity. I think some of that is also reflected in the big CASA growth we're getting from the corporate side.
So I'm not going to talk about those 2, but let me take the rest very quickly. So the first, as you know, we did Lakshmi Vilaas. I'm pleased that the integration of Lakshmi Vilaas is Page 6. It's going quite well. At this point in time, we stabilized the business.
The deposits started going up. Casa was up 14% for the quarter. We've done this by rationalizing deposit costs. So we've dropped the overall cost of deposit by 40 basis points, and that's already been able to drive some improvement in the economics. We've started picking up the asset base against gold loans that are up 4% for the quarter.
And we've revised and changed the underlying journey and system for the SME and medium and small term loans. We centralized the credit process for that. So we've overlaid the DBS credit thinking around that SME area. We're being a little bit more careful on that, particularly given the new pandemic pickup in India. So we go slightly slow.
But overall, the key business metrics are looking good and they're consistent with what we looked at in the Q4 when we decided it was a deal worth pursuing. There were concerns earlier about the possibility of asset quality in Lucky Willard, actually even the asset quality is looking relatively good. It's consistent with what we thought we would see. The legacy, as you might remember, we brought on $212,000,000 of net NPA onto our books when we did the deal. That's actually shrunk a little bit because we were able to get some recoveries.
We're also getting some recoveries on previously written off loans. We've been able to actually focus very hard and do that. So that's been a little bit of upside. Some of the portfolio we knew was weak and we expected to go into NPL has indeed gone into NPL. But the additional SPs we needed on that were not large and we were able to reverse them from the general provisions that we had taken in anticipation when we did the deal.
So next step, lastly we'll ask is tracking. It's tracking relatively well. We're not seeing too much stress on any dimension right now. I think it will still take us the next few quarters to start actually making the acquisition sweat, But we have a full team in there working quite assiduously to try and make that happen. If I go to next slide, the Shenzhen Rural Commercial Bank.
This we just announced recently. It's a smaller stake. I mean, it's a 13 percent stake, but it's obviously a much larger bank. The interesting thing about Shenzhen Rural Commercial Bank, if you look at the bullets, 1, it is a complete private bank. It's been operating since 2,005.
It's only in Shenzhen. It got a license to the rural commercial bank, but if anybody has been to Shenzhen in recent years, you know there's not too much rural going on in Shenzhen. And therefore, the bulk of that business is like any other bank's business. It's got a very good retail base. It's got a very good solid SME base.
It's got a slightly upmarket wealth base. It is professionally managed and it is widely held. If you look at the shareholder base of the bank, it's some 32,000 individuals and a significant number of SMEs. The largest three shareholders, each own about 5% of the bank and then employees own a chunk of the bank. So 13%, we are going to be the single largest shareholder of the bank and that gives us a degree of influence in that bank in the activity.
As you can see from the numbers on the right, the bank's performance has actually been very good. Its net profit after tax has had a CAGR of 11% in the last 5 years. Its NPL ratios are quite tight. Its ROE is goal has been 17%, 18% ROE over the last 5 years. And its capital adequacy is actually quite strong.
So altogether, it's actually a nice need as a bank. If you look at the next page, it points to the 3 fundamental things I think this bank and this deal does for us. Number 1 is clearly an attractive economic investment. So if nothing has happened, it just seems to me that having a 13% stake in a franchise that is well managed delivering high ROE is actually quite attractive. And the way the capital discipline works for us is we do equity accounting.
So we take 13% of the income and straight add it to our income. That's about $100,000,000 $110,000,000 to our bottom line. Whereas from the asset side, we really do risk weighted asset accounting on our investments. So our $1,000,000,000 of investment actually translates to RWA of about $3,500,000,000 which is about $350,000,000 $400,000,000 of equity. So on a usage of equity, this is like a 25% return on allocated equity, if you will.
So it's actually quite an attractive economic investment in and of itself. Also as the bank grows, it is at some stage the intentions it will IPO. So hopefully there is some upside over there. But the second big upside we have is the opportunity to help build both the Shenzhenul franchise as well as our franchise. Shenzhenul is the size where it's now beginning to want to go international for many of its customers.
Its customers are looking for services in international trade, they're looking for services in international FX, some of the customers are getting to state where they want to do IPO, increase their capabilities. And the bank was very keen to try and start digitizing. One of the reasons why they find us an attractive partner, we bring digital capabilities and we bring international capabilities, international presence and some capital markets capability. The flip is true. As we are trying to build out GBA and make it an increasingly important part of our franchise, for us, the supply chain and going down the supply chain is very important.
And Shenzhen Rural Commercial Bank's customer base gives us a really good opportunity to go deep into the 1st, 2nd and third tier of the supply chain of our large anchor customers. So I do think from a business synergy standpoint, it is a win win on both sides. And I think it will be value accretive both to Shenzhen Rural as well as to DBS. And finally, the 3rd big upside, of course, as we all know that the Chinese regulations have changed and they're now open to foreigners owning even 100% of a local bank. As this bank continues to grow, it is going to continue to need capital.
I already mentioned at some stage, it's probably IPO. But as it continues to need capital, I do believe that we have the opportunity to continue to increase our position in this bank given the regulations and the need for capital the bank has. So altogether, I think it's a really good platform for us. It just improves our it's accretive from day 1 and that's a great place to be. If I move to the next slide, the new businesses, I said we're focusing on how do you build out digital infrastructure, which allow us to improve our position in the new economy.
The digital exchanges we announced the last time, the Q1 has been steady. As you know, our digital exchange capabilities are much like Coinbase. And Coinbase, of course, listed at levels we all know. Difference is that Coinbase is mass market and retail and really very judicious. We are approaching this as well positioned for accredited investors and for professional institutional counterparties to start with.
Despite this and despite the careful way in which we're expanding the business, the Q1 numbers have actually been quite encouraging. We have about RMB 18,000,000 of assets under custody today, we have about RMB 120 web customers. With a pipeline of customers, there's 100 more. We've been being careful about who we add on. We've got $80,000,000 under custody.
The total trading volumes of 1 of our 10x, we're doing about $30,000,000 $40,000,000 of trading. We are going to do the 1st securities token offering we hope in this quarter. So, so far, there's only the crypto trading capability, but the STO is going to start. We're also going to expand the timings of the exchange from Asian working hours to 20 fourseven. And so I'm actually quite optimistic that the coming quarters and certainly the second half of the year, we'll see us start getting a lot more traction with this business.
If we go to Slide 10, this we announced just last week that we set up a technology company together with JP Mogler and Demasek to focus on trying to see create a platform to change the way cross border payments and settlements work. As you all know, the problem with cross border payments and settlements has always been a T plus 2 problem. Your message to the beneficiary goes in real time, but the settlement goes through hub and spoke. It goes through the sender's correspondent bank and then goes to the receiver's correspondent bank and finally goes to the beneficiary. Today with leveraging blockchain, you can actually change that whole paradigm.
You can actually convert your money into effectively fiat money, digitized money and you can send it across so the settlement happens as soon as the original message reaches. You can also program this. And because you can program this, the actual settlement can be programmed to happen if conditions 1, 2, 3, 4 happen. So that's very powerful. It changes the latency of the process, but it also changes the capacity to program the way instructions get done.
Our plan along with JPMorgan and Temasek is to make this an open platform. So it's not a closed platform. While we are launching the tech companies, underlying operating hubs will be many. In the first instance, we're doing Sing Dollar and U. S.
Dollar converting into Fiat money. But we are actively looking to bring in banks so that other currencies, euros, sterling, renminbi, etcetera, all become part of the system. And if we can do that, then that will give us essentially the ability to be an important part of an infrastructure that could actually be game changing for the way payments happen. So if you look at the upsides to us and obviously being part of our financial infrastructure is helpful and there might be some value in the infrastructure over time. It certainly helps us with our own customer value proposition.
We think we can go to our clients and provide them a completely different way of doing not just money transfers but also doing other things, the DBP, the delivery versus payment, the payment versus payment, the FX market, the securities market. We think all of these can be reimagined with this construct. And finally, the third thing it gives us is what I referred to before. We have been able to take some of our technology that we have built and actually license this to the new company. So it does give us a new revenue stream from software or technology services, if you will.
Like I said, if you watch this space, we continue to look for other opportunities to do similar activity where we can effectively use software as a service to build a new set of revenue streams for ourselves. Finally, the last one I want to talk about was the security joint venture. We announced it in September. We got approval in September. As you can see from the right hand side, we have 51% ownership.
The other 25% is by SOE, which is controlled by Shanghai SaaS Act. 24% is by SOEs controlled by the Shanghai, Wangchuk District. But we do have an option to purchase back from the SOEs in Sears. The approval was in September. The legal incorporation happened in due course in January.
All our on-site inspections by the regulators were completed in March. We've been able to put in all the infrastructure, the technology is in place. We've hired the team and the people. We have about 100 headcount in place at this point in time. We're just waiting on the business license to be issued to us from the regulators post inspection.
And we expect to get that anytime in the next few weeks. We're quite optimistic about this business because obviously the 2 way flows in and out of China expanding. Already even without this entity, our focus on the institutional investor space and the custody space in China has been paying us rich dividends. We think with this entity, we'll be able to accelerate that business and activity to a different level. So let me stop there.
It gives you a good sense both for our view on the core business as well as some of the things we're trying to do so that we can reposition the bank to emerge fundamentally differentiated and much stronger from this crisis in the coming years.
Okay. We'll now take questions. Thank you, Piyush. Anna, over to you.
Thank you. Ladies and gentlemen, we will now begin our question and answer session. Your first question is from Rebecca, who's from S&P Global Market Intelligence. Your line is now open, Rebecca. Please go ahead.
Hi, good morning. I've got two questions. First, I was wondering, do you think the allowance writeback is too early? And do you expect more writebacks this year? And the second question is, how do you view your NII panning out for the rest of the year as rates stay low?
Do you expect NIM to stabilize at current levels? Or do you expect a further write or fall? Thank you.
Great. Thanks for the question, Rebecca. On the announced write back, I was actually careful to point out that we have 2 categories of allowances, one which are driven by models and the models reflect effectively what is happening in the market. There is another component about $1,000,000,000 as Sophie pointed out, which we created as a separate management overlay for things like the moratorium and other uncertainties. The second category I said, we are not touching because we think it might be too premature to start writing them back before we know what is happening.
The model driven outcomes, we can't control. The model driven outcomes just reflect what is happening to the underlying portfolio if there's an upgrade of accounts or companies start performing better, which happens, so a chunk of that reversal is because these companies have improved their performance. If the exposures in some names reduce, that's happened because some of the weaker names have paid us back, then the model just turns out a number and the number is what the number is. And auditors don't let you actually change that number very much. But the broader question is what is the outlook on allowances?
I do think that the overall prospects for the portfolio are looking better than I thought even 3 months ago. Monetorians are looking better. The sectors are looking better. We are not seeing weaknesses in any particular sectors. Our consumer flow rates are looking better.
So I would not be surprised if we actually wind up seeing reverses this year, which I had not anticipated 3 months ago. Your second question on NII. NII guidance on NIM guidance, we haven't changed. We said earlier that we think we'll be somewhere between 145 basis points and 150 basis points on NIM. We think that's likely to be the case.
There's still a couple of headwinds on NIM. One is that rates are still coming off. HIBOR came down to 9 basis points. LIBOR came down to record lows. So that is still a little bit of challenge.
So while the Sing dollar rates have been holding, the Hong Kong and the U. S. Dollar LIBOR rates have been creeping down. The second challenge, obviously, we still have a residual portion of our fixed rate portfolio, which has still got to reprice, and that reprice will continue to trigger into the course of this year. So that is a second headwind.
There is a little bit of upside, and the upside obviously comes from the fact that the longer end of the yield curve is picking up. And so you have the opportunity to put on some duration. We're very cautious because I'm concerned that you might actually see some massive inflation steepeners at the very long end. So I'm reluctant to go to the 10 year level. And in the belly of the curve, there is some pickup but not a lot more.
But when you put all of that together, I think our guidance of NIM 145 to NIM, I think it's still relatively safe.
Thank you. Thank you, Rebecca. Your
next question is from Chania Poon from Chen Chahan. Your line is now open. Please go ahead.
Hi, Piyush. I have three questions. The first one, are you interested in Citibank Consumer Assets in Asia? Do they have any appeal to DBS? And second question, given the recent Huarong fallout in China, is DBS reducing exposure to Chinese SOEs?
3rd question, please could you comment on the property market in Singapore? Do you see a need for cool down measures? Thank you.
Okay. So, Sanjay, on the first one, I have to tell you, as you know, I spent 27 years at Citi. And so right in the mid-80s when we launched our consumer business, I've been very interested in Citi's consumer business and asset. But if your question is to do with TBS, that's a different question. But joking aside, we will as you said before, we are always open to looking at assets that could be incremental to our franchise.
And certainly in countries where we do have a franchise, we will take a look at those assets. So I think the process hasn't started yet. It will start in due course. We know that when we did the ANZ deal, that was actually quite beneficial to us. It gave us scale that was very accretive.
So yes, in due time, we will take a look at them. I also want to hasten to add though that I've said this several times before, we are very disciplined. So the economics must make sense. We must make sure that we have the capacity to be able to do it and so on and so forth. And so if it winds up to be a skirmish and a bidding frenzy, then you might not see us in the middle of that.
On the Chinese SOEs, we've actually been quite circumspect with our Chinese SOE management now for several years. We stopped actually relying on state support in our credit assessment 5, 6 years ago. We think of the Chinese SOEs on a standalone basis. We apply all our standard credit assessment and judgment and dealing with them. And therefore, at this point in time, we've not had any reason to tighten up or reduce exposures to any Chinese, so these are principally.
We've obviously, in different sectors, we've been quite thoughtful about managing our exposures, but that's been now for the last 2, 3 years. So there's nothing specific at this point in time. And finally, a question on the Singapore property market and measures. Frankly, your guess is as good as mine. I don't really have a good sense for what the authorities might think and do.
It is a fact that housing loan bookings have been at record levels and I do think some of it reflects people's view that you might see some cooling measures and so people are trying to get ahead of that, but I don't have any further insight than that.
Thank you, Piyush.
Thank you.
Okay. Are there is there no further questions? Okay. We have one from Vivian from Business Times. Anna, could you let her in, please?
Yes, of course. Vivien, your line is now open. Please go ahead.
Hi, Su. This is regarding the Shenzhen Bank acquisition. I'm wondering what this means for your Greater Bay Area strategy and if you could share more details on BBS message and penetration you have in that particular region. And my second question would be on updates on the bank's review of physical FSA requirements and whether it tends to reduce its physical footprint? Thank you.
We've actually previously announced that the GBA is a big part of our agenda and strategy. We're not that dissimilar to several other banks who also see that as a big opportunity. For us, leveraging Hong Kong franchise as well as our presence in China has been beneficial. We've been focused on this now for 2, 3 years, and it's actually giving us very good traction. Our growth rates there are substantially higher than the growth rates in the rest of China or the rest of Hong Kong.
And we're doing that by really focusing on both the new economy sectors, but principally leveraging the supply chain connectivity as you go down. Eventually, as the Wealth Connect opens up, we will obviously look at that as well. But from that standpoint, the Shenzhen Rural partnership will be very beneficial because they bank some 250,000 SMEs up and down the entire system and which gives us the ability to go deep into supply chain. Leveraging our digital tools and capabilities and working in partnership with them, providing those digital capabilities into that customer base, I think will be extremely helpful. Like I said before, I think we can also provide them a lot of other international services for their customers.
So I think that this 13% ownership and partnership can actually be quite a game changer for us in terms of expanding our franchise in GBA. Your second question on property space, we said earlier that when your point announced our thinking about the future of work, that we're giving our employees the flexibility of working from home up to 40% of the time, 2 days a week or alternate week or something like that. And as we do that over the next 5, 6 years, as our various leases come up, we anticipate seeing a reduction in our overall requirement by about 20%. So we won't see full 40%, we'll see about 20% because we're reshaping the offices to promote more celebration, more participation, more collaboration. But we will see some reduction.
And so we already announced giving up some space in Hong Kong, some space in Singapore and as part of that thinking in that plan.
Thank you. Thank you, Vivien. Our next question is from Dhej.
Your line is now open. Guler, please go ahead.
Hello. Hi, Dhej
and thanks for the briefing and congratulations on your very good results. Can you hear me?
Yes.
Okay. So I have, I think, 3 questions. The first one is, you said I think you said you have $4,000,000,000 in GP. And so what is the portion of your management overlay versus what you can write back from your MEV model? That's the first question.
That's for this year for 2021. And the second question is, does your CET1 include the acquisition of the Shenzhen Rural Bank? And the third question is, can you do an update on the progress of DigiBank in India and Indonesia? And have the new Singapore Digital Bank provided any competition to you yet? Yes, those are the questions.
So why don't I let Sakkui take the first two questions on the breakups, allowances and the CEP and then I'll make some comments on the DigiBank.
Yes. So your first question on the management overlay, so it's about $1,300,000,000 but we also told you that we are $1,000,000,000 above the MES requirement. So unless we are prepared to kind of take a hit on the CET1 ratio, you should assume that maybe we would sort of cap it at about $1,000,000,000 And the pace will depend on sort of the progress as Piyush has mentioned. I see consumer banking, the more local local sort of situation would free up sort of the GP first in the locations in consumer banking followed by SMEs and the moratorium staple off. And then for the larger corporate, we'll have to sort of monitor sort of the social and economic situation as the borders open.
Your second question is on the
CEP. CEP.
The Shenzhen, we have at the time when we announced it, we said it will be a 0.2 percentage point impact. It's roughly 0.16 percentage points. It's not fixed.
And Gula, your third question on Digibank in India and Indonesia. In India and both countries, by the way, we've been going slow on the asset side of the balance sheet. There is a large part of our trust from last year was to use the DigiBank to do more unsecured lending, but the environment has not been conducive to do that. And so we've deliberately slowed down the asset side of the balance sheet, particularly in India. On the liability side, the consumer side is continuing to do well.
It continues to do slightly better in Indonesia than in India, interestingly. Partly, it has to do with the last mile interfaces and the fact that the COVID comes in the way of that. But nevertheless, we're seeing steady progress. It's not earth shattering, we're seeing steady progress. In Singapore, nobody has actually launched any DigiBank yet.
I don't think it'll happen till 2022. So no, we're not seeing any impact at this time.
Okay, thanks. Okay, thank
you. Thank you, Piyush. I'm afraid that's all we have time for today. Thank you, everyone, for tuning in. The next briefing is the analyst briefing, and that will start at 11:30.
Thank you. Thank you.