DBS posts record quarterly profit, powered by lending income

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DBS Group Holdings Ltd, Southeast Asia's biggest lender, beat market estimates on Monday to post a record quarterly profit, as strong net interest income offset weakness in wealth management, brokerage and investment banking fees.

First-quarter profit rose 8.5 percent on a year earlier, while DBS, the first Singapore bank to kick off the sector's results, said the macro-economic environment had stabilized.

"We were positively surprised by the strength in trading gains," Jefferies analyst Krishna Guha said in a report. "Overall, core driver was in line with expectations, we expect similar trends for peers as well."

Net profit came in at 1.65 billion Singapore dollars (1.21 billion U.S. dollars) for the three months to the end of March, up from 1.52 billion Singapore dollars a year earlier and an average estimate of 1.48 billion Singapore dollars from four analysts, according to Reuters.

DBS shares advanced 2.8 percent to the highest since June 2018, outperforming a 0.8 percent rise in the broader market.

"We have had a good start to the year as business momentum was sustained and non-interest income recovered from the recent weakness," CEO Piyush Gupta said in a statement.

DBS said its loans grew one percent from the fourth quarter. Non-trade corporate loans rose three percent while trade loans declined four percent.

"The record earnings and return on equity (ROE) progression demonstrate the strengthened profitability of our franchise from digitalization, a shift towards higher-returns businesses and more nimble execution," Gupta said.

The bank's return on equity rose to 14 percent, its highest in more than a decade. Net interest margin rose five basis points to 1.88 percent, in line with higher interest rates in Singapore and Hong Kong.

Source(s): Reuters