Okay. Hi, everyone. Welcome to the analyst briefing. You have heard the presentation during the media briefing, so as usual, we will go straight to Q&A. The first question from Jayden from Macquarie. Jayden, go ahead and unmute yourself and ask your question. Jayden?
Hey. Can you hear me okay, Nick?
Yes.
Okay, great. Yeah, thanks a lot for the opportunity. I just wanted to ask a little bit around the guidance. First of all, you have got sort of mid-single-digit growth, which seems to be implied from the outlook for rates and loans, et cetera. I just wanted to sort of check if you had any thoughts specifically around sort of fees, because it sort of implies that the fee trajectory is going to slow a little bit. If I look at the growth in the net new money and the wealth performance this year, I am just wondering if there is something you are seeing that is giving you some pause and the reason why it is sort of implying a bit softer guidance. That was the first question.
The second thing is, if you could comment at all around sort of deposit competition, because some of your peers have sort of said that is heated up. If you look at your performance, obviously your margins have been really strong. I am just wondering if you are seeing any sort of pickup on the deposit competition side, if anything we should be aware of. Those are the two questions I wanted to ask, and thanks very much.
Okay. On the fee and the non-NII, we said that if the markets are good, because a lot of it depends on both volatility and volume. If you have good volatility and hopefully more upside than downside, and good volumes, then this year we grew by double digits. Hopefully next year we will continue to grow, all being well, by the low double digits. But if the markets melt down and sentiment turns negative and volumes dry up, then it is hard to go against the market, right? We are looking at high single-digit growth. That is just, I think, being a little bit prudent. But you are right.
I mean, look, underlying, the client growth is solid, the net new money is solid, and what is also solid is the fact that the franchise is now pivoting towards a stronger recurring income type of shape of the portfolio. More discretionary, in-house discretionary, third-party discretionary, that percentage of AUM has been growing very nicely. On the retail wealth side, as I have always said, it is the regular savings plans, it is just getting more and more consumers on board, and they save a little bit more every year, and they give us their CDP accounts, et cetera. That is all snowballing quite nicely, and that is just, it is a slow but gradual accumulation of fees at the lower retail end. The fees for transaction banking is actually growing quite well, and that speaks to us now winning a lot more mandates for transaction services and for trade, right?
It is cross-border cash payments, it is trade services, it is supply chain financing, it is custody growth. It is also the fact that we are one of the few banks that can tokenize deposits, that can tokenize gold. That, again, it is the velocity of flow. If you win a lot more operating accounts, you naturally get more flow, you naturally get more flow, more CASA, and more fees. That speaks to your other question around deposit growth and deposit competition. I will kick off and I will let my colleagues chime in. There, I think, earlier in the year where people were we saw some of our peers reducing their loan rates, whether it is for mortgages or some large corporate loans, we deliberately lost some market share, and we held our own, and we actually increased some of our We kept our deposit rates high.
We kept our frontline rates high, we did not cut our deposit rates, and we won market share in the last two quarters, especially in the last quarter, because we were hopefully, I guess, quite prescient in predicting that rates were going to rise. Also, we wanted to increase our market share deliberately, and so we did a lot of work, the team did a lot of work there to both take deposits and win new mandates, both for consumer and for wealth and for corporate. I think that has worked out well. Going forward, a lot of work being done still on mapping out elasticity of deposit rates using both AI, agentic use cases, and also taking advantage of any volatility in the markets. By the way, we have seen a lot of that.
To really continue to hedge our interest rate going forward, grabbing whatever high rates we see. On that, I will open up to my colleagues to say anything on deposits.
I think deposits-wise, we have been quite good at gathering CASA. If you look at the CASA performance for this quarter, it is good because we are getting new mandates and a green light for securitization. Our acquisition has also seen the customers funding the accounts earlier to a good momentum for acquisition. So it is a combination of new pipeline, attracting deposits, new mandates that we get from current customers, operating cash mandates. These are the ones that are helping us to get the deposit in, and this is something that we will continue to just work along because it is a machinery just to win and then implement and keep going on that basis.
I guess on the fee side, the one thing I would like to call out is that from a wealth management perspective, I do not think we should only always just look at one quarter per se. I think we need to look at it in a cumulative fashion, right? Particularly when we had actually a record quarter last quarter. If you look at nine months, actually it has been very strong. Nine months versus nine months, right? On the wealth fee side, we have grown north of 20%, right? When we look at what the fuel is for such performance, a lot of that has to be fueled the acquisition of new customers, as well as the deepening of that in getting net new money. Q3, we have had a very, very strong, in fact, a record net new money quarter.
So that would mean that actually there is a lot of dry powder. Building on what Su Shan said, right? Of course, with that dry powder, depending on how the markets go, that will always be one factor. Having said that, we have also over the years been diversifying the revenue stream coming from our wealth business, which would include actually a pretty sizable growth in our discretionary portfolio management, a reasonable growth as well in other areas in terms of our funds distribution, which in and of itself will have some level of commissions, right? At the same time, there is always also our insurance momentum that has been very, very strong this year. So with the increasing client base, the dry powder there, I do think we have what it takes to do well, barring any market meltdown.
Okay. Thanks. Next question is from Harsh from JPMorgan. Harsh, please go ahead.
Hi. Thanks for this. Two questions. One is on capital planning, let's say over next three years. Immediate term question is how much of CET1 have you recouped in last five weeks from end of quarter? More broadly, over next couple of years, it seems the NII growth is a bit more RWA growth linked. So the excess CET1 generation has come off. In that regard, how do we think about the regular divi? Do we get that SGD 0.06 pickup this year in fourth quarter? Then that's it, then we kind of stabilize at SGD 0.72? Also the capital return, we have five more quarters to go, but once that SGD 0.75 is paid, do we have scope of those numbers continuing or any other sort of buyback amount getting repaid? How do we think about broader capital management till, let's say, 2028?
Thank you. That's one question. Second is on MAS had a statement on Friday, last Friday, that Singapore-based banks should look to rethink their relationship with companies and clients related to haze. Both at a corporate and private bank, is there any meaningful impact for DBS? Thank you.
Okay. I'll take off, and maybe I'll get Sok Hui, Phil to add in. So our fully phased-in CET1 ratio is 14%, and post the op risk multiplier reduction, it goes up to 14.1%. 14.1%, that means excess capital above 13% is about SGD 5 billion. We are still fully committed to fully distributing the capital returns, which is SGD 0.15 per quarter committed till end of 2027. On the buybacks of the SGD 3 billion, we spent about SGD 0.4 billion, so we've got SGD 2.6 billion left. It'll be opportunistic. If the markets are really, really bad, we'll use it. If for some reason we can't finish using it, we'll find some other ways of returning it. For example, that means if you have to extend the capital returns dividend beyond 2027, we'll ask the board to deliberate next year, right?
Our ordinary dividend growth will be funded purely by earnings growth, and there we are really building the franchise, as you know, Harsh, for structural growth in terms of number of clients, volumes for both deposit and loans, in terms of fee growth for wealth, FIG, and GTS. Cost delta reductions. We have been successful, and we will hope to continue to demonstrate success there. Our agentic AI workflows are kicking in. We can capacitize now for growth. I spoke about it earlier on, the fact that our cost delta is +2 point something percent versus +8 before. Yet we have done with that delta a lot of foundational work and investments around our tech architecture, around our data architecture, around our human training and retraining, and around our agent and human workflows. All that is not for real. It is very hard work.
It is meant that the culture we have around being journey-focused and our ability now to shift left, that means going more upstream, means we are in a better position now to bring in new clients, bring in new volumes, and then work its way, work that way through the fee gathering. I will let Sok Hui or Phil weigh in on the capital planning side, on the CET1.
Harsh, I think given that we have for the record nine months, I think we are in a good position. I think ultimately it is a board decision, and depending on what happens, we will look at the earnings trajectory over a multi-year period before we consider the fourth quarter 2026 dividend. I think your question was over a slightly longer time horizon. Our planning assumption is that if we can grow profits at about 5% CAGR, we should be able to grow dividends at about 5% CAGR. That is kind of like the long-term direction that we can consider.
Also on RWA, although it looks like it is RWA and NII-led growth, actually there is also a lot of fee growth. Also, we have a discipline in IBG of recycling, asset recycling, and being ROE-focused on whatever we onboard.
On the palm oil names.
Yeah, palm oil names.
What we have done, maybe just to level set and let everybody hear this, in the way we look at the palm oil industry, our approach is that we require the borrowers to align with the no deforestation, no peat, no exploitation, which is commonly known as NDPE. As well as telling them that RSPO certification is a good industry practice, which the client should be on it. On that basis, more than 90% of our portfolio are on RSPO compliance, and everyone is complying with NDPE. We have zero tolerance for land clearance by burning. That essentially is our position. Based on the names that are highlighted, a handful of them are our customers, and we do have some small exposure. But in the overall scheme of things, it is really quite small.
These customers have consistently shared with us that they are under RSPO, and so that is the certification that we feel is the best practice that the palm oil industry should follow.
And on-
Love it.
Yeah. Harsh, on the private bank side, I mean, riding on what Kwee Juan has said, it is similar. I mean, our overarching views and policies would always be aligned with that, right? Having said that, in the private banking space, you will find that customers themselves, some of them might be shareholders if there are any of that, right? So it depends on how shareholders of listed companies for a start. So, it is, I would say, to a certain extent, probably another level removed. Also, on the other hand, many of the high-net-worth individuals do have a whole series of different kind of assets and companies, businesses that they run in and of themselves.
So even if they are part of some of these names that are being looked into, it might only be one part of the overall wealth that they have accumulated over the many, many years.
So there are multiple ways of looking at it. Having said that, again, our portfolio is very, very diversified. Our clients come from over 110, between 110 and 120 nationalities. So again, in the wider scheme of things, not a huge impact at all to the overall PB franchise.
Great. Thank you for that. I just wanted to double-check on one thing, Su Shan. 13 CET1, is that a comfort range? Is that a target? Is there a number that we should think we should get to over, let's say, three to five years? Or it's just something you want to be close to?
Our MOR has always been
13-13.5.
13.5. And we've been Anything above 14 is very comfortable. But within 12.5-13.5 is still what we've officially communicated in the past.
Okay. Thanks so much.
Thanks. Thanks, Harsh. Next question from Yong Hong from Citi.
Hi, Nick. Can you hear me?
Yep.
Thanks for the opportunity. This is Yong Hong from Citi. Just two related questions and one on AUM. Just clarifying on your guidance, if we assume a balance sheet growth at 5%, SORA up by 30 basis points, and based on your sensitivity parameters, net interest income should grow by high single digits for next year. But just reconciling with your earlier commentaries of mid-single digits, is this driven by your expectation for balance sheet growth to slow? A related question is, if there is a trade-off between net interest margins and trading income, because if you look at this quarter, the commercial book NIM is down, but NIM is good from markets book. My question is, are we deploying more now, given that yields are higher, which is translating to better NIMs?
But as a result of that, should we be moderating our expectations on markets trading income, especially if current environment holds? And finally, on wealth AUM, net new money was SGD 15 billion, but do you have the split for the FCNR, because that will not be repeated, and what is the migration to private bank AUM and the mark-to-market impact? Yeah, these are my questions. Thank you.
Yeah. I think there is some natural diversification between our commercial book and our trading book, and that's why we have been giving you the sort of interest rate sensitivities to Sing dollar interest rates and U.S. dollar interest rates. In our commercial book, the U.S. dollar is actually quite balanced. You see that this round we're giving you NII sensitivity guidance about SGD 10 million per basis points. That's the sensitivity to Sing dollar interest rates. Then the minus two basis points is to U.S. interest rates, because the trading book is basically the trading book being funded in U.S. dollars.
I think you can make your own assumptions of how much you think rates will rise for both the U.S. dollars and the translation and the pass-through to Sing dollars, because not every rate hike increase will have the same effect and translation into Sing dollars. We also model, as rates go up in Sing dollar terms, there may be some outflow into treasury bills, which we have seen in previous periods as well. On the whole, I think, like I said earlier, you take third quarter net interest income, you annualize it, add a bit on the net interest income you get from Sing dollar sort of pass-throughs and the growth in loans and deposits, I think you arrive at a number that would be shade below 5%. That's kind of like how we're looking at the net interest income.
Okay. Because of what the deployment into treasury assets, should we be also expecting any offsets from your market trading books?
Maybe I start with that.
Okay. Phil?
Yeah. This is Phil. Yong Hong, the two are quite separate here. The markets trading is really the GFM business, that is public markets. You see that on the other income line, and that is the P&L that we were referring to earlier. For the hedging business and everything we do in the center, that goes under hedge accounting, and that goes to the net interest income line. When we talk about NII, that includes the impact of interest rates. Maybe just one comment to add to what Sok Hui said. One other unknown, I would say, is how much deposits are going to grow next year. This year, we saw about 9% pickup across Singapore and U.S. lenders, nine months year to date. Next year, we think it might go back to mid-single digits.
If you have got a different assumption around that, you can always work it into your numbers. That is the other difference to perhaps why you might come up with a higher number than ourselves.
And for your question around net new money, SGD 15 billion, that, just to clarify, that SGD 15 billion is without FCNR.
Okay. Do you have the FCNR number? Because if you take-
FCNR is about SGD 5 billion. Yes. As I mentioned in the earlier briefing, net new money is SGD 15 billion for this quarter. If you add in the FCNR, you get to about SGD 20 billion.
Okay. That means the migration from private bank to mass retail to private bank AUM is actually quite chunky as well this quarter, just so I can solve the numbers together.
Sorry, can you repeat the question?
Migration from retail to private.
No. It is not necessarily a migration. When we look at our We do have, of course, clients through the continuum migrating, but if it is just migration, it is left to right pocket, right? When we say net new money, it is really net new money assets coming in from outside funding the account. It is new clients being acquired, it is existing clients bringing more of their assets in. The movements between segments does not add on to net new money per se.
Yep. Correct. Yep. Because if you take out net new money, SGD 544 minus 15, minus last quarter SGD 516, the jump is still SGD 13 billion, which is quite sizable this quarter, especially the market conditions are not as favorable. Just wondering.
Yong Hong, you are basically looking at the AUM growing Q on Q, and then you are putting the SGD 15 billion, you are adding the SGD 5 billion. The rest would be essentially mark to market.
Positive mark to market, actually.
Correct. AUM is always a function of net new money plus mark to market of what has been deployed into investments. The strong momentum of our wealth business has always been built on these two pillars, that we have been able to bring net new money consistently now for many, many quarters. At the same time then, through the advice that we give, have our clients deploy that into investments. So it is cash to investments, and thankfully, those investments have done well. That is why there is positive mark to market.
Okay, got it. These are all my questions. Thank you.
The delta is also some existing retail customers going up to wealth now.
Oh, yes, of course.
AUM.
Of course. That would also be new to wealth customers. New to wealth customers, meaning to say if we had retail customers who were never in the investment journey because of our digital wealth nudges and advice through that, some of them then got onto the new investment journey, and we've seen a bit of that as well.
That impacts AUM, but it does not impact-
Correct. Net new money. Correct. That impacts AUM. You are right. That impacts AUM if the investments that they have made have grown mark to market. Because to move from deposits to an investment is a left pocket, right pocket as well. They will benefit from the mark to market. So, Yong Hong, I hope you can see how the dynamics work here. Yeah?
Okay. Next question from Melissa from Goldman Sachs.
Hi. Hi there. Thank you very much for taking my question. I just have a few questions. Just on the wealth again. So the net new money is really robust this quarter, SGD 15 billion. Do you think this is a new run rate that you can deliver? I mean, you have good targets for where you want your net new money to be. But just wondering, this big step up that we have seen this quarter, is this a new benchmark at which we would run? And how do you think about net new money in a volatile market? Have you seen historically that it can kind of drop off as well? Then on my second question, maybe on your expenses, you have given both a CIR ratio and also an absolute kind of growth that you are looking at mid-single.
Is it the lower of the two, or if things are better, we get to the 40%, but if not, then we are benchmarked down as well?
Okay. Should I take the net new money one first?
You take the net new money.
All right. So on the net new money, whether this is the new momentum, one of the things I'll say is, I wouldn't look at it always just purely from a quarter to a quarter. We have to look at it, for now, I would say look at it nine months to nine months. I'll say generally, we do our business planning on an annual basis. What we do need to look at is the momentum that we have been able to build over the last few annual kind of net new money that we've garnered. I guess the positive thing to look at is that we have been very consistent now in the last few years, and this has been a marked increase from, I would say, several years ago. So we can clearly see the momentum growing.
I would say that the momentum is good if you look at it from an annual basis, and that we believe we are able to sustain and grow. And part of the reasons is that, if you look at quarter to quarter, it's sometimes dependent on new customers that we bring in. Some will take a bit more time to onboard, or when they get onboarded, they take a bit more time to organize their transfer of their assets. That's why I wouldn't look at momentum from a quarter-to-quarter basis, but look at it in a more holistic fashion. At the very least, in this case, nine months to nine months, and then let's look at it full year to full year.
Okay. Melissa, I will take your cost income ratio question. Honestly, as a team, I think we are very disciplined around where we spend. As my Chairman likes to say, you cannot cut your cost to greatness. We actually do invest for the long term and for the immediate. The immediate investments are around things like cybersecurity, things like the data foundation. We are building a really good foundation for tech, data, resiliency, and making us future-ready right now. All that cannot be compromised, and that we spend. Having said that, the saves that we have noticed, we have been able to save more than we predicted around some of the capacity and the people costs. Why? Because using these new agentic workflows has really led to capacity and productivity improvements for our staff.
Someone who used to cover X number of clients can now cover X plus Y number of clients. A client empowered with AI now maybe has one, two, three more products with us. If you get your data architecture and your tech resilience and your tech architecture right, then you are future-ready for an agentic world where you can use less humans and more agents to do a lot of your work. Because we have been managing through journeys, we can actually even look at reworking our workflows and our work processes. We call this operating model transformations, really reworking our workflows and shifting left. Shifting left means spending more time, more effort to acquire new customers, to acquire new-to-bank customers, or acquire new-to-product customers, cross-sell, if you will, so that we can actually make more money with less effort.
Net-net, I do not manage just to hit a cost-income ratio target. We manage in an agile fashion because as we use AI, we go, "Oh my God, I can save some money there," and then we save. Sometimes we say, "I need to invest in growth." We have been investing in wealth, we have been investing in FIG, we have been investing in GTS and payments. We do not cut, we do not stint on those. We continue to invest. The wealth teams, we could, and they have been hiring a lot of RMs, and we have not been cutting there. But the existing RMs have been enabled by agentic workflows to help to do more. So every RM, every investment counselor can do more.
Similarly in IBG, every RM that we have, even our ops people now can be trained to be more sales-oriented, because the agent can do a lot of the operational work today. Our coders, people that used to do low-level production, level 1 production engineers, they were the production engineers. We do not need so many of them anymore because of AI. They become more level 2, level 3 engineers, where there is more domain knowledge, for example, in wealth tech, in trading tech, in our new core banking systems. They have to upskill themselves to go up one level to become more accretive to us. My hope is that whilst I am not single-mindedly focused on, say, the 40% cost-income ratio, we can show growth with less need to spend so that we can increase productivity across the board.
Okay. We will move on to the next question from Aakash of UBS.
Great. Thank you for taking my question. This is Aakash from UBS. I have four different questions. The first one is-
Aakash, let me limit you to, in the interest of time, two.
Two? Okay. The first one is a set of questions on wealth management, and they are housekeeping questions, they are very quick. The invested portion of AUM was 59% last quarter. What is that number this quarter? If we think about the fee to invested AUM margin, that seems to have dipped in Q3 because activity levels were lower, and our calculation says it is down like 14, 15 basis points quarter-on-quarter. How is that trending in November? Has November gone back up, or is it still down? Then net new money, there does not seem to be any impact from China in Q3, China regulations, I mean. Is it possible that we see this in the Q4 numbers? Those would be the three wealth management questions.
Shee Tse Koon, you want to take it?
Okay.
Yeah. Okay. I think in terms of the investment AUM as compared to total AUM, it's gone up marginally to 59% this quarter, right? But of course, if you look at it, the wealth segment includes Private Bank, PB, and then TPC, and then Treasures, right? And typically, you will see, relatively speaking, Treasures would generally hold relatively more deposits than TPC and PB. These are actually good opportunities we have, right? Especially as we work through the wealth continuum, that is actually very good. If you look at really the PB level, it's about 70%. From there, you can see our ability to actually have this tripod, as I like to call it, to bring them through the continuum. Anyway, now we're saying it's 59%, so a marginal improvement. Again, not necessarily unsurprising because our net new money is very strong.
As we always mention, right, the whole engine is about bringing net new money and then gradually doing cash to investment deployment from that front. That's why while net new money has gone up, we're still able to hold this ratio and have it marginally up. I think it's a reasonable performance from that angle. Now, as to the return on AUM, I think if we look at this vis-à-vis the market, I would say that we are probably still a reasonably strong performer from that angle. But why there is a dip has to do partially with the market as we have seen it, because in the equity structures, which often is the one that does contribute to a fair amount of these return on AUM, that has slowed down a bit in the last quarter because of the market condition.
Yeah. It is dependent on market vols and volumes. But as I said earlier on, I think what the team has been doing is to gradually move more of their AUM to discretionary AUM, sort of both run in-house and third party. The discretionary figure is now about SGD 59 billion for wealth and SGD 72 billion for wealth and retail. So, it's been growing quite nicely. Very consistently, every quarter, this figure will grow. That means the recurring income part will grow. So, yeah, wealth fees over AUM, it's very much dependent on the markets. But the good news is if you just keep growing your net new money, the net new money will guide you to your denominator. But gradually, they will convert, right? As they set up their trusts and they set up their insurance and their estate planning, then they start to invest after that.
It takes time for the net new money to be deployed. It's not immediate, but it should snowball.
China.
China regulations.
Oh, China.
China regulations, as was guided, sorry, forgot. The China regulations, whether it looks, your point is that it looks like there has been no impact on the net new money. I'll say that this is actually reasonably consistent with what we've guided in the past. Because in the first place, the way by which we conduct our business has always been compliant, right? So whatever regulations that are there, we've always taken measures to be very, very compliant with how things are done. Therefore, with these regulations coming, in a way, it's not so direct impact. Secondly, our franchise has always been very diversified, as we have said from many, many quarters ago. As a result, you can see for yourself now that despite some of these new regulations, we have still been able to keep the momentum up.
I just came back from Hong Kong, and I will tell you that our Hong Kong wealth management onshore growth has been very strong. Very, very strong. The momentum continues in Hong Kong, for sure. And Taiwan.
Yeah.
Okay, great. I think in the interest of time, we probably have time for just two more people to ask questions. We will go to Joanna from Jefferies, and then we will go to Nick Lord from Morgan Stanley. Joanna, go ahead. You can unmute yourself, Joanna.
Hi, Nick. Can you hear me?
Yep, yeah.
Okay, thanks for the call. Just two quick questions from me, just to follow up on net new money. I appreciate that you mentioned that it is quite diversified, but I actually wanted to ask if you could share a little bit more specifically where the inflows are coming from a geography perspective. Any particular one to two markets driving the bulk of this increase? And second question is on your GP reserves. I noticed that has continued to decline, despite the ongoing macro and geopolitical uncertainty. Just wondering how much scope remains for further reserve releases, and what do you think could drive credit costs higher from current levels? Thanks.
No, I am afraid I cannot break down for you the different geographies, because as I mentioned, our customer base comes from 110 to 120 nationalities. We run our franchise by several regions and then sub-teams, sub-regions, so it is actually not that easy for me to just break it up for you in that sense.
Sure. Fair to say it is quite broad-based, yeah? There is no one to two markets that really stood out driving that SGD 15 billion of net new money?
Yes, it is very, very broad-based. Very, very broad-based. And as I said also, we do not look at it in just one quarter, right? Sometimes you see in one quarter, it might be a few markets, in another quarter, it is another market. So if you look at it in totality, it has always been very, very broad-based. And to the question that was asked, the previous question, right? We have been consistent in what we have said, and despite what we have seen, some regulations change and all that, we have been able to keep this going.
On general provisions, two reasons. The first is we have been de-risking on the consumer loan side. Our cards and unsecured loans volumes, we have been deliberately shrinking that. That is why the GP reserves have gone down. The other is, very simply, it is just repayments, right? Which is not a bad thing. We have had quite a few repayments, so that is why we reduced it. Sorry.
Yeah, so under our methodology, if the case is actually a very weak credit, so it is not yet NPL, we actually step up our general provisions quite a bit. I think as we communicated in the previous quarter, because of the sort of big repayments we saw, we were able to reduce the general provision allowances. That is one. Then the other one is really the de-risking of the emerging markets, the credit card and unsecured loans. We shift away to sort of the higher quality type of financing, and so that also reduced the general provisions we needed to set aside. It is very much a function of the business and the client behavior and the repayments that we received.
Okay. Thanks.
Got it. Thank you.
Thanks. Finally, Nick from Morgan Stanley. Nick, go ahead.
Can you hear me?
Yep.
Can you hear me?
Yeah.
Okay, sorry. Yeah, two questions. First of all, just if I can come back on this wealth issue. I guess the thing that stands out is, in terms of your AUM growth, is that you seem to have achieved a positive return for your clients in the quarter, which is great, but very, like against what everybody else has achieved. Most people have seen negative investment returns in the quarter. I do not know if there is anything particular that you can point out that has allowed you to achieve that result. Secondly, just to invite Su Shan to say a little bit more about what, Tan, you were saying in the media call about agents.
And I guess my question is, do you see a role whereby DBS will effectively develop its own agents for retail or institutional customer use as part of a product set, given the risks of having other people's agents operating within your bank? And I just wondered if you've had, maybe not so much from the retail side, have you had much expression of interest from your corporate clients to begin to use agents in their banking services?
Who's answering the question?
I would say, broadly, I guess the investment calls that we have taken, we have this barbell strategy that we coined from quite a while ago and have been quite disciplined at that, right? And that is something which we deploy in our own discretionary portfolio management strategy as well. And of course, that is also what we use to kind of help construct portfolios and budget on clients that way. So if you were to follow that, by and large, when we look at our barbell DPM performance, we have always been quite consistent when we compare with similar type of portfolios across the various portfolios that others have, like for like. We have always been performing within the top four to even 8, 9% top performance.
So if we were to kind of follow that, I would think that that would be a big contribution to how our portfolios have actually performed.
Nick, are you looking at the wealth management AUM being up 28%, whereas net new money was 15, and you are trying to triangulate the difference, right?
The mark to market, right?
Sure.
M&A was five.
Yeah. That leaves 20.
Yeah. That is 20. There was some mark to market gains, and there was some retail migration to wealth. That could be it.
Yeah.
But most people have seen AUM flat, Tan.
Yeah. It is a mix of different reasons.
Hmm. Okay. Do you think your performance, your investment performance has been better? Is that linked to the fee side?
If we look at our DPM, they generally outperform benchmarks.
Okay. No, that is great. Thank you.
Okay, Nick, your question around agentic use cases and where we are. Earlier this year, we said that we were going to roll out 12 enterprise use cases, and we call them operating model transformations. That is where we use agentic AI, we relook our workflows, and we do massive changes to hopefully optimize and make life easier both for our customers and get them to do more with us, but also to make life easier for our colleagues. Are we worried? Yes, we are. We worry about our clients divulging their passwords and what have you to unknown third-party agents. We worry about autonomous agents hacking banking systems. We worry a lot about an agentic world and the risks that the financial system has to face. That one thing that causes sleepless nights, that is it.
That is why the investments that we will not compromise on is building our tech resiliency, our cyber resiliency, and our data resiliency. I think if you want to keep the trust in an agentic world, the winners and the losers will be differentiated by how strong and how ready they are in the face of these potential unknown attacks. That is why all those investments that we have done around tech resiliency, around data resiliency, we are still doing it, but we will want to stay ahead. Then, if you want to be an agentic bank, you have got to learn how to use agents in a safe way, and that includes building the harness, right? We have a lot of debates around the board as to what is the architectural coherence for an agentic bank? How do we compare with that?
What kind of model, sovereign models do we need to have? What kind of sovereign codes do we need to have? What kind of sovereign harness do we need to have? What kind of sovereign control planes we need to have? We are learning all that right now. I will not pretend to you that I have all the answers today, but my team and I have workshops coming out to see where we want to land. We actually did land two months ago, but admittedly, things change so fast, we have to change our landing from September and maybe come up with a new landing by December on where we want to go with agents. The early look around how we have deployed agents in operations, for example, in tech, for example, in IBG, for example, in wealth, for example, we see very good, solid early wins.
I can ask Han Kwee Juan to share with you how agents have helped him, for example, deliver more fee growth for IBG.
Nick, I think your question has two parts on agent. I just want to clarify if that is what you are looking for. One is on how we are using it, and the other is, are our customers asking us if we can provide agents to them as they use our system? Would that be the second one?
Correct. Yeah. Yeah. Yeah. Correct. Yeah.
For the first one, we are an extensive user of agents in our workflow. One of the things that we have done is, since last year, we started to build an agentic solution for credit memo creation, which will include analysis as well as recommendation. That went live in April this year across 12 markets. 1,500 RMs are using it, and on a year-to-date basis, generates more than 1,800 credit memo already. That in itself gives us the confidence of knowing how to build agents that are purposeful in that particular journey of credit memo.
Expanding that into the external agents that we have, today, our chatbot, Joy, in our digital banking solution under IDEAL, is an agentic agent of sorts, where when customers ask for inquiries, then on the back of it, there will be a few agents that will pull information and then present that to the customer. That is for information only, and it is in the background where the customers do not see it. The next thing that we are building, which is our next edition of IDEAL, we call it IDEAL 9, we will be creating a hub called Agents Hub, and that would be based on what we see as common requests from our clients as they use our system for information and for liquidity management, for knowing how to manage their exposure. Those we think are agents that customers are likely to call when they are using IDEAL 9.
We are doing customer immersion now to see the level of comfort that they would have in providing that to their staff as they use our systems. It is a discovery journey right now, and we are thinking about that to see how customers can make their lives easier when using our digital banking, and then assisting them to get the outcome that they want, especially when it comes to information gathering.
Okay.
Great. Thank you very much.
All right. Thank you, Nick. Thank you, everyone. We are at the end of the briefing. Thanks for joining, and we will speak to you guys again.