Singapore: Net profit at Southeast Asia’s biggest lender, DBS Group Holdings, fell 7% year-on-year in the second quarter on a lower valuation of its stake in Thailand’s TMB Bank, DBS said.
The net profit of $369 reflected a $159 million impairment charge because of the lower market valuation of its 16.1% stake in TMB Bank, DBS said.
The impairment charge was partially offset by a $55 million write-back on an office property in Singapore as market valuations improved.
Before the one-time items, net profit was $664 million, up 21% from the same quarter last year, the bank said.
Net interest income which is the difference between interest paid and interest earned rose 14% to $1.03 billion, crossing $1billion for the first time during a quarter.
The rise was driven by higher loan volumes. Customer loans rose 19% year-on-year to $99 billion led by corporate and other business lending and supported by an increase in housing loans.
Net fee income climbed 25% to $371 million led by wealth management, stockbroking, credit cards and investment banking, DBS said.
However, net trading income was 44% lower year-on-year, at $97 million as customer flows and trading gains were not as favourable.
Non-interest income reached $524 million up from $457 million. Expenses were 11% higher at $660 million led by staff and computerization costs.
DBS vice-chairman and CEO Jackson Tai, told reporters the decision to write off the value of its TMB stake was purely an accounting issue and should be viewed separately from whether or not DBS should help recapitalize TMB.
Based in Singapore, the bank has a subsidiary in Hong Kong and operations in China, India, Indonesia, Malaysia, Thailand and the Philippines. State-linked investment firm Temasek Holdings has a 28% stake in DBS Group Holdings.