DBS profit rebounds, seen gaining as rates outlook improves

SINGAPORE, Feb 14 (Reuters) - DBS Group flagged strong business momentum after its profit rose to a record last year, cementing a recovery for Southeast Asia's largest lender as pandemic-hit economies rebound and boost loan growth and asset quality.

Singapore lenders are also expected to be big beneficiaries of rising interest rates, while the city-state's economy is forecast to grow three per cent to five per cent this year after expanding at its fastest annual pace in over a decade in 2021.

"We look forward to the coming year with a prudently managed balance sheet that is poised to benefit from rising interest rates," DBS CEO Piyush Gupta said in a statement on Monday (Feb 14), adding that the bank expects mid-to-single digit loan growth or better this year, after reporting a nine per cent increase last year.

DBS, the first Singapore bank to report this season, said net profit for October-December rose to $1.39 billion and follows a particularly weak pandemic-hit year when profit tumbled to a three-year low in the fourth quarter.

The result however missed an average estimate of $1.47 billion from four analysts polled by Refinitiv, and was also 18 per cent lower than the third quarter, hit by a 41 per cent drop in non-interest income.

DBS, which earns most of its profit from Singapore and Hong Kong, struck a deal last month to pay $956 million to buy Citigroup's consumer business in Taiwan, as it shores up regional acquisitions to power growth.

The Singapore lender's full-year profit rose 44 per cent to a record $6.8 billion as a nine per cent growth in loans, the highest in seven years, and a surge in wealth management and transaction banking services fees offset the impact of lower interest rates.

Allowances for loan losses decreased to $33 million in the latest quarter from $577 million a year earlier.

Buoyed by the improved outlook for banks, investors have pushed up Singapore bank stocks this year, with DBS and smaller rival UOB trading at record highs.

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