dbs group reports strong second quarter beats expectations 906562015

DBS Group Holdings Ltd (SGX:D05), the largest bank in Singapore and Southeast Asia, said its net profit during the second quarter was SG$1.12 billion, up 15 per cent compared to the prior year period, while total income rose 16 per cent to SG$2.69 billion on the back of solid net interest and fee incomes that touched new quarterly records. The result surpassed an estimate of net profit of SG$1.07 billion from a Bloomberg survey.

Net interest income rose 12 per cent year on year to SG$1.74 billion benefiting from an increase in net interest margin by eight basis points to 1.75 per cent. Loans grew 9 per cent with growth in corporate and housing loans partly offset by lower trade loans.

Net fee income jumped 16 per cent to SG$582 million. The bank said contributions from most activities posted double-digit percentage growth.

The bank also reported strong trading income that boosted other non-interest income by 44 per cent to SG$365 million.

CEO Piyush Gupta said: “Despite slowing growth across the region, DBS achieved record earnings in the first half of the year driven by strong broad-based income growth. Notably, net interest margin is at its highest in 13 quarters. In a reflection of our confidence in the sustainability of our earnings, we are pleased to raise first-half dividends to reward shareholders.”

The Board declared a first-half dividend of 30 cents per share compared to 28 cents a year ago.

Asset quality remained strong according to the bank, as the non-performing rate remained unchanged at 0.9 per cent with allowance coverage at 160 per cent, and 304 per cent considering collateral.

The bank said its Common Equity Tier-1 ratio was 13.4 per cent, Tier-1 ratio at 13.4 per cent and the total capital adequacy ratio at 15.3 per cent. The leverage ratio of 7.3 per cent was twice the minimum of 3 per cent currently envisaged by the Basel Committee.

Earlier this month, ratings agency Moody’s revised its outlook on the Singapore banking system, held as negative since July 2013. It revised its outlook from ‘Aaa stable’ to ‘stable,’ citing moderating domestic and cross-border credit growth and the soft landing in Singapore’s domestic property market. Moody’s rates Singapore banks as follows: DBS Bank Ltd (Aa1 stable, aa3), Oversea-Chinese Banking Corp Ltd (OCBC) (Aa1 stable, aa3) and United Overseas Bank Ltd (Aa1 stable, aa3), according to The Star Online.

The last two banks named above will report results on Friday.