DBS upbeat as quarterly profit soars
SINGAPORE: DBS Group Holdings Ltd said yesterday that it expected to lift its net interest margins this year, as it reported a 33% rise in quarterly profit and announced higher dividends.
The results came after the bank had surprised markets in November by doubling its quarterly provisions to the troubled oil and gas sector and saying the worst was probably over.
Kicking off the reporting season for Singapore’s banks, DBS said its fourth-quarter net interest margin, a key gauge of profitability, rose seven basis points to 1.78%.
“We are quite optimistic about 2018,” CEO Piyush Gupta told a news conference. “We enter the coming year with sustained momentum across our businesses and, more fundamentally, in our digital transformation.”
Southeast Asia’s largest bank by assets reported net profit of S$1.2 billion (US$905 million) for October-December versus S$913 million a year earlier. This matched the S$1.2 billion average estimate of six analysts compiled by Thomson Reuters.
Full-year net profit rose 4% to a record S$4.4 billion.
Gupta said he expected DBS to further improve its net interest margins and reaffirmed the bank’s 7-8% loan growth outlook for this year.
Three-month Singapore dollar interest rates are currently at 1.12%, after rising to nearly 1.51% in early January, the highest since October 2008. A year earlier, the rates were about 0.96%.
The annual performance was driven by broad-based growth in loans and fee income, which more than offset the impact of less favourable interest rates and trading income, Gupta said.
The bank’s net fee income grew 23% in the fourth quarter, with the increase spread across most fee income streams and led by wealth management and investment banking.
DBS announced an increase in its final dividend, and a special dividend of 50 Singapore cents per share to return the capital buffers it had built up ahead of the finalisation of new capital rules.
Since Gupta took over as the CEO in 2009, DBS has more than doubled its group profits and broken into the top-five private banks in Asia, helped by medium-sized acquisitions.