UPDATE: DBS reports 1H21 net profit jumped 54 percent to record on strong business momentum

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This item was originally published on Thursday, 5 August 2021 at 8:51 a.m. SGT; it has since been updated to include more details. 

Southeast Asia’s largest bank DBS reported Thursday its first half net profit climbed 54 percent on-year to S$3.71 billion, a record high, on strong business momentum and resilient asset quality.

“We achieved an exceptional first half with the first and second quarters the two highest on record. Business momentum and asset quality have both been better than expected as the economic recovery from the pandemic takes hold,” Piyush Gupta, CEO of DBS, said in a statement. “While risks remain, our pipeline remains healthy and we expect business momentum to be sustained in the coming quarters.”

Net interest income for the January-to-June period fell 12 percent on-year to S$4.20 billion as the net interest margin (NIM) drop of 27 basis points to 1.47 percent offset loan and deposit growth, DBS said in a filing to SGX. Most of the NIM decline happened after global interest rate cuts in March 2020, DBS said.

First half net fee and commission income grew 20 percent on-year to S$1.82 billion as wealth management fee grew 27 percent on-year to S$945 million, with investment product sales boosted by an improving economic outlook in a low interest rate environment.

Other non-interest income slipped 2 percent on-year to S$1.43 billion as record trading income was offset by lower investment gains, DBS said.

“New NPA [non-performing asset] formation and specific allowances fell to pre-pandemic levels and general allowances were written back. The strong growth in business volumes and lower allowances more than offset declines in interest rates and in investment gains from a high base,” DBS said in the statement.

The non-performing loan (NPL) rate improved to 1.5 percent from 1.6 percent a year earlier, while first half specific allowances fell 46 percent on-year to S$364 million, coming in at 18 basis points of loans, in line with pre-pandemic levels, DBS said.

DBS declared a dividend of 33 Singapore cents a share for the second quarter, bringing the first half dividend to 51 cents a share, unchanged on-year.

Second-quarter results

For the second quarter, DBS reported net profit climbed 37 percent on-year to S$1.70 billion and net interest income for the quarter fell 9 percent on-year to S$2.09 billion, on NIM of 1.45 percent, down 4 basis points on-quarter.

That largely beat a Daiwa forecast for second quarter net profit of S$1.37 billion, with estimates of net interest income of S$2.15 billion and NIM of 1.49 percent.