This article was originally published on Monday, 29 July 2019 at 7:30 A.M. SGT; it has since been updated with more details.
DBS reported its second quarter net profit Monday jumped 20 percent on-year to S$1.60 billion on corporate loan growth, a higher net interest margin, record fee income and improved trading performance.
Net profit for Southeast Asia’s largest bank had been expected at around S$1.48 billion for the quarter, based on an average of three analysts’ forecasts. Daiwa tipped net profit of S$1.514 billion, while UOB KayHian forecast S$1.452 billion.
“We achieved a record half-year performance despite heightened economic uncertainty and geopolitical tensions,” Piyush Gupta, the bank’s CEO, said in the statement. “The results reflect the strengths of an entrenched broad-based franchise that is well placed to nimbly navigate market volatility and capture opportunities as they arise.”
Total income for the quarter ended 30 June increased 16 percent on-year to S$3.71 billion, the bank said in a filing to SGX before the market open.
Net interest income increased 9 percent on-year to S$2.43 billion in the quarter, DBS said, that was in line with an estimate of around S$2.41 billion, based on the average of three analysts’ forecasts.
The closely watched NIM, or the difference between the interest rate banks charge to lend and their cost of funds, rose to 1.91 percent, up from 1.85 percent in the year-ago period, and beating analyst expectations for 1.89 percent or 1.90 percent. That was as loans in Singapore and Hong Kong were repriced with higher interest rates, DBS said.
Loans increased 1 percent on-year in constant-currency terms as trade and non-trade corporate loans increased, DBS said.
“Consumer loans were little changed as a continued decline in housing loans was offset by growth in other consumer loans,” the bank said.
Net fee and commission income increased 9 percent on-year in the quarter to S$767 million, while other non-interest income rose 88 percent on-year to S$513 million after a weak performance in the year-ago period, DBS said.
CGS-CIMB forecast non-interest income would come in at S$1.097 billion, while Daiwa estimated S$1.109 billion, compared with around S$979 million in the year-ago quarter.
Wealth-management fees increased 11 percent on-year to S$332 million on higher investment product sales, while card fees rose 16 percent on-year to S$198 million on higher activity in the region, DBS said. Investment banking fees jumped 44 percent on-year to S$56 million on higher debt and equity capital market income, the bank said.
DBS declared a second quarter dividend of 30 Singapore cents a share, for a first-half total of 60 Singapore cents a share, unchanged on-year.
For the first half, DBS reported net profit rose 12 percent on-year to a record S$3.25 billion, while total income increased 11 percent on-year to S$7.26 billion.
DBS said it was sticking with its 2019 outlook for mid-single-digit percentage loan growth and mid-single-digit basis point NIM improvement, with a modest impact from interest rate cuts expected in the second half.
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