DBS reports 1Q22 net profit dropped 10 percent as market turmoil hits wealth management

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Southeast Asia’s largest bank DBS reported Friday its first quarter net profit fell 10 percent on-year to S$1.8 billion, as global market turmoil weighed on earnings. The results beat forecasts from Daiwa and CGS-CIMB.

Banks globally have seen their earnings dented in the first quarter due to market volatility over the January-to-March period – driven by Russia’s invasion of Ukraine and higher interest rates.

DBS’ wealth management fees fell 21 percent on-year to S$408 million, as declines on investment product sales were offset by higher bancassurance income, DBS said in a filing to SGX. Investment banking fees also declined 12 percent on-year to S$43 million on decreased fixed income activity, DBS said.

“The performance was moderated by a high base for wealth management and Treasury Markets activities a year ago, when buoyant market sentiment and clear market momentum had driven income from both activities to exceptional level,” DBS said in the statement.

Net interest income for the January-to-March period grew 4 percent on-year to S$2.19 billion, the bank said.

The net interest margin (NIM), or the difference between the interest rate banks charge to lend and their cost of funds, came in at 1.46 percent, compared with 1.49 percent in the year-ago quarter and 1.43 percent in the fourth quarter of 2021, the bank said.

Net fee and commission income fell 7 percent on-year to S$891 million, DBS said.

As a bright spot, card fees increased 11 percent on-year to S$187 million as credit and debit card spending topped pre-pandemic levels and travel spending picked up, DBS said.

Daiwa had estimated net profit would come in at S$1.73 billion, with net interest income of S$2.19 billion. Daiwa had forecast DBS’ NIM at 1.49 percent, compared with 1.43 percent in the fourth quarter.

CGS-CIMB forecast net profit of S$1.7 billion, and net interest income of S$2.18 billion on NIM of 1.44 percent.

DBS CEO Piyush Gupta was generally upbeat on the results.

“First-quarter business momentum was strong and broad-based, and earnings were second only to the exceptional quarter a year ago. Geopolitical developments in recent weeks have created macroeconomic headwinds and financial market volatility,” Gupta said in the statement.

“While some activities such as wealth management will be affected, our overall business pipeline continues to be healthy and we will benefit significantly from interest rate increases in the coming quarters,” he added.

DBS declared a first quarter dividend of 36 Singapore cents a share.