DBS posts better-than-expected S$1.2b Q1 core profit

SINGAPORE — The city-state’s biggest bank — DBS Group — on Tuesday (May 3) reported a better-than-expected 6 per cent rise in first quarter core net profit as an increase in housing loans and corporate borrowing offset a drop in China-related trade loans.

The bank reported a core net profit of S$1.2 billion for the three months ended March 31, compared with S$1.13 billion a year earlier and better than the average forecast of S$1.04 billion by a Bloomberg survey of six ­analysts and the average S$1.017 billion forecast by five analysts polled by ­Reuters. Last year’s overall first quarter net profit of S$1.269 billion was boosted by a one-time gain from a property disposal.

Total income reached a new high, rising 5 per cent to S$2.87 billion as net interest income grew 8 per cent to S$1.83 billion. 

CEO Piyush Gupta called the quarter’s performance particularly satisfying as it was achieved in unusually challenging market conditions.

The contribution from trade finance fell 23 per cent, largely due to a drop-off in China requirements. Mr Gupta had explained in the bank’s annual general meeting late last week that providing trade finance to mainland firms was no longer viable ­because the costs of borrowing in China were falling below those in Singapore and Hong Kong.

But the lower trade finance contribution was offset by a 3 per cent rise in non-trade loans from corporate borrowing and a 13 per cent increase in Singapore housing loans.

The increase in total expenses continued to decrease, rising 7 per cent to S$1.27 billion compared with a 10 per cent increase in the previous quarter and a 14 per cent rise in the first nine months of last year. 

A slower growth in headcount and continued improvements in operating efficiency underpinned the smaller cost increase, said DBS.

DBS’ competitors had earlier reported weaker earnings.

Oversea Chinese Banking Corp (OCBC) last week reported a 14 per cent fall in first-quarter profit as provisions for bad loans more than doubled and the contribution from its insurance unit declined. 

CEO Samuel Tsien said: “Given the weak economic environment and further stresses noted, especially in the oil and gas support services sector, we continued to adopt a conservative approach and this was reflected in the increased level of provisions set aside for the quarter.”

United Overseas Bank’s (UOB) net income, meanwhile, fell 4.4 per cent to S$766 million, with gains in net interest income offset by a drain in earnings from wealth management, trading and investment. 

The bank’s income decline, said Mr Wee Ee Cheong, UOB’s CEO, was due to the slower growth environment.