This article was originally published on Monday, 29 April 2019 at 7:26 A.M. SGT; it has since been updated with more details.
DBS reported Monday its first quarter net profit rose 9 percent on-year to S$1.65 billion as higher interest rates boosted its net interest margin and on strong growth in corporate loans.
“We have had a good start to the year as business momentum was sustained and non-interest income recovered from the recent weakness,’ Piyush Gupta, CEO of DBS said in a statement. He pointed to gains from digitization, shifting to higher return businesses and better execution.
“We are well placed to continue capturing growth opportunities across the region,” he added.
The net interest margin, or the difference between the interest rate banks charge to lend and their cost of funds, rose 5 basis points to 1.88 percent on higher interest rates in Hong Kong and Singapore, DBS said. That was in line with Daiwa’s forecast.
Net interest income increased 9 percent on-year to S$2.31 billion as loans increased 5 percent on-year in constant currency terms to S$347 billion, DBS said.
Daiwa had forecast net interest income of S$2.38 billion.
Non-trade corporate loans increased 11 percent on broad-based activity in the region, while consumer loans rose 3 percent, DBS said.
But trade loans declined 11 percent on unattractive pricing and a general market slowdown, DBS said.
Net fee income fell 2 percent on-year to S$730 million in the quarter, DBS said. Daiwa’s forecast was for S$727 million.
Wealth-management, brokerage and investment banking fee income declined 12 percent on-year after an “exceptionally buoyant” year-ago quarter, DBS said.
Recovery from tough fourth quarter
“Healthy business momentum and a higher net interest margin more than offset the impact of a high base for wealth management, brokerage and investment banking fee income as well as a property gain a year ago,” Southeast Asia’s largest bank said before the market open.
The bank declared a divided of 30 Singapore cents a share.
On a quarter-on-quarter basis, DBS said its net profit increased 25 percent as wealth management and trading income recovered from a tough fourth quarter, when a market meltdown weighed on demand for wealth management.