DBS’s profit up to S$735m

But the second quarter result is only a 2% increase compared to 2010.

DBS said net interest income increased 7% from the previous quarter and 12% from a year ago to S$1.20 billion. Loans expanded 7% during the quarter and 15% from a year ago, led by corporate loan demand. Net interest margins of 1.80% remained stable at recent quarters’ levels.

Non-interest income fell 19% from the previous quarter and 15% from a year ago to S$639 million. Investment banking fee income declined from the previous quarter, which had benefited from significant IPO activity. Stockbroking commissions were below both comparative periods as market volumes fell.

Trading gains also fell due to the marked-to-market impact of hedges taken for a portion of fixed income investments in the available-for-sale portfolio. Lower contributions from these activities more than offset continued growth in wealth management and trade and remittance fee income. Income from customer flows for treasury products was comparable to the previous quarter and higher than a year ago.

Expenses rose 3% from the previous quarter and 11% from a year ago to S$798 million, bringing the cost-income ratio to 43%. Specific allowances for loans remained low at seven basis points of loans compared to nine basis points in the previous quarter and 19 basis points a year ago. General allowances of S$99 million were taken in line with loan growth.

The Board declared a first-half dividend of 28 cents per share, unchanged from the previous half-year. The scrip dividend scheme will be applicable to the dividend. New shares will be issued, to shareholders who elect to have their dividend in scrip, at a price that is at a 5% discount to the average of the last-dealt price on each of 8, 10 and 11 August 2011.