Singapore's DBS beats expectations in Q1 earnings

Singapore's DBS beats expectations in Q1 earnings
PHOTO: Reuters

Singapore's top lender, DBS Group Holdings, on Tuesday reported better than expected first quarter earnings, helped by its wealth management business that brought in record high income.

The bank said first quarter net profit rose to 1.21 billion Singapore dollars, up 1 per cent from a year ago and higher than the average forecast of 1.09 billion Singapore dollars by Reuters.

Its fee income jumped 16 per cent to 665 million Singapore dollars, led by a 26 per cent increase in wealth management fees to quarterly high of 222 million Singapore dollars from stronger sales of unit trusts and other investment products.

Net interest income, however, was flat at 1.83 billion Singapore dollars.

DBS' shares traded 2.6 per cent higher by 9:30am SIN/HK, outperforming the broader Straits Times Index that was up by about 0.9 per cent.

"We have had a good start to the year," said DBS CEO Piyush Gupta in a press release.

"Earnings were maintained at the quarterly high achieved a year ago as business momentum and productivity gains were sustained, offsetting the impact of a lower net interest margin. Our business pipeline is healthy, consistent with the recent improvement in economic data for key markets. While asset quality pressures appear to be moderating, we remain vigilant to continued headwinds in the oil and gas support services sector."

Jeremy Teong, investment analyst at Phillip Securities, said growing the loan book will be key in the coming quarters.

"What might weigh in the future is loans growth. The guidance if mid-single digit (growth) so let's hope that will be the case for the year. What we're a little bit concerned is it's a very challenging lending market. Our forecast has always been a flat net interest income growth… so the profit line will be driven by cost savings, lesser provisions," Teong said on CNBC's "Squawk Box."

Last week on April 27, United Overseas Bank, or UOB, said its first quarter net profit rose 5.4 per cent from a year ago to 807 million Singapore dollars. That was higher than the 765 million Singapore dollars that CIMB Securities projected and 775 million Singapore dollars that Daiwa Capital markets expected.

Oversea-Chinese Banking Corp., Singapore second largest lender, will report results for the first quarter on May 9.

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