DBS’ net profit jumps by 20% to $1b

On back of higher non-interest income.

The banking giant beat analysts’ expectations as it utilised a surge in net interest margin and non-interest income to pose a 20% growth in its net profit, while also crossing the $10b mark for its total income for the first time.

According to a press release by DBS, excluding one-off gains, its net profit actually grew by 12% to $4.32b. Return on equity also rose from 10.9% to 11.2%.

DBS added that its asset quality also displayed resilience, with specific allowances for loans rising slightly to 19 basis points of loans, while non-performing loan rate remained unchanged at 0.9%.

“Allowance coverage of non-performing assets remained healthy at 148%,” DBS said. “The performance underscored the breadth and resilience of the DBS franchise as it successfully captured income opportunities and managed risks in a year marked by slower economic growth, financial market volatility and heightened asset quality concerns,” they added.

Meanwhile, DBS said its net interest income increased by 12% to $7.10b, while its net interest margin improved nine basis points to 1.77%, its highest in five years.

Loans also grew by a reported 3% to $283b due to currency effects, while trade loans fell by 25% in constant currency terms, DBS said.

“The decline was offset by a 5% constant-currency increase in non-trade loans from higher corporate borrowing and market share gains in Singapore housing loans,” DBS added.

“Non-interest income grew 12% to SGD 3.69 billion. Net fee income rose 6% to SGD 2.14 billion. Wealth management fees increased 18% as a strong first half more than offset a slower second half when market volatility reduced investment activity. Fees from cards and loan-related activities also rose by double-digit percentages,” the release said.