Singapore’s largest bank DBS said on Monday that its net profit rose 76 percent on-year to S$1.41 billion, missing some analysts’ forecasts.
Excluding some one-time items, including year-earlier ANZ integration costs, net profit for the quarter ended 30 September would have been up 72 percent on-year, the bank said in a filing to SGX before the market open on Monday.
In the year-earlier period, DBS had taken accelerated allowances for oil and gas support service exposure.
DBS CEO Piyush Gupta pointed to the bank’s accolades, such as Euromoney naming it the world’s best digital bank, while also acknowledging a difficult quarter.
“Third-quarter business momentum was sustained amidst heightened geopolitical and economic headwinds,” Gupta said in the statement. “We are well positioned to continue capitalizing on Asia’s long-term prospects while navigating short-term uncertainties.”
Net interest income for the quarter was up 15 percent on-year at S$2.27 billion, on increased loan volumes and a higher net interest margin, DBS said. Loans grew 8 percent on-year to S$340 billion, it said.
The net interest margin increased to 1.86 percent in the third quarter from 1.73 percent in the year-ago quarter and 1.85 percent in the second quarter of 2018 as interest rates in Singapore and Hong Kong rose, the bank said.
Net fee and commission income edged up 1 percent on-year to S$695 million, as a two-thirds drop in investment banking fees offset increases from other activities, it said.
Card fees rose 33 percent on-year to S$185 million on higher customer transactions and from consolidating the acquisition of ANZ’s retail and wealth-management business, DBS said. Wealth-management fees were up 7 percent on-year at S$292 million, with higher bancassurance income offset by lower investment sales income, it said.
Other non-interest income rose 2 percent on-year to S$407 million, DBS said. Net trading income rose 34 percent on-year to S$354 million as treasury market trading gains rose from a low base, it said.
Nomura had forecast DBS’ net profit would come in at S$1.58 billion, with net interest income of S$2.33 billion, net fee and commissions of S$792 million and trading and other income of S$567 million.
Daiwa had forecast DBS’ net profit at S$1.48 billion, with net interest income at S$2.28 billion, non-interest income at S$1.07 billion, fee and commission income at S$738 million and net trading income at S$237 million. It forecast net interest margin at 1.86 percent, up from 1.85 percent in the second quarter.
Deutsche Bank had said it expected DBS’ trading income would recover after an unusually weak second quarter. It had forecast net profit would come in at S$1.425 billion.
Expenses in the quarter rose 18 percent on-year to S$1.48 billion, with the ANZ integration accounting for 6 percentage points of the increase, DBS said.
Compared with the second quarter, net profit rose 3 percent, it said.
For the nine-month period, net profit including one-time items, rose 34 percent on-year to S$4.26 billion, DBS said.
This article was originally published on Monday 5 November 2018 at 7:01 A.M. SGT; it has since been updated.