Home >Companies >DBS first-quarter profit rises 6%, beats estimates

Singapore: DBS Group Holdings Ltd., Southeast Asia’s largest bank, announced a 6% increase in first-quarter profit, beating analyst expectations, as its earnings were bolstered by higher net interest income. Its shares jumped.

Net income rose to S$1.2 billion ($897 million) for the three months ended 31 March from S$1.13 billion a year earlier, the Singapore-based bank reported Tuesday. That beat the average forecast of S$1.04 billion in a Bloomberg survey of six analysts.

DBS was the only one of Singapore’s three large banks to report a rise in first-quarter earnings, with lenders around the region pressured by an economic slowdown and a collapse in commodity prices. Its two smaller rivals, Oversea-Chinese Bank Corp. (OCBC) and United Overseas Bank Ltd. (UOB), both posted lower profit in statements last week.

Net interest income rose 8% to S$1.83 billion from a year earlier. The net interest margin, a gauge of lenders’ profitability, was higher at 1.85%, compared with 1.69% a year ago and 1.84% in the previous quarter.

“A decent set of results overall with manageable asset quality and strong non-interest income," Melissa Kuang, an analyst at Goldman Sachs Group Inc. in Singapore, wrote in a report.

DBS stock rose 2.2% to S$15.6 as of 9:03 a.m. after earlier gaining as much as 2.6% , the biggest intraday increase since 13 April.

Net fee and commission income rose 3% to S$574 million, as higher revenue from wealth management and credit cards offset a slump from investment banking and trade services.

Slowdown effects

Despite the higher profit, DBS’s results showed some effects from the regional economic slowdown. Its non-performing loan ratio edged up to 1% of the total portfolio, from 0.9% in both the previous quarter and the first quarter of last year.

While total allowances for credit and other losses fell 6%, that masked an increase in specific provisions for bad debts, which rose to S$170 million from S$160 million a year ago.

The bank’s profit in the first quarter of 2015 was boosted by a one-off gain from a property sale. Including the item, its net profit would have fallen 5% from S$1.27 billion a year ago.

After Tuesday’s gain, DBS stock has fallen 6.7% this year. The shares fell 19% last year, mainly on investors’ concerns about Singapore banks’ exposure to the oil and gas sector, ending a three-year period of annual gains.

OCBC, DBS’s closest competitor, said last week first-quarter profit dropped 14%, as provisions for bad loans more than doubled and the contribution from its insurance unit declined. UOB’s net income fell 4.4% to S$766 million as gains in net interest income were offset by a dip in earnings from wealth management, trading and investment. Bloomberg

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Edit Profile
My ReadsRedeem a Gift CardLogout