DBS profit surges 20% to $1.37b in Q2

Strong consumer and non-trade corporate lending offset weak trading income.

DBS maintained its positive momentum for the financial year after profit rose 20% YoY to $1.37b in Q2 on the back of healthy consumer and non-trade corporate lending, according to a media statement.

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Total income rose 10% YoY to $3.2b in Q2. The bank’s loans also rose 12% to $338b in the first half of the year, boosted by the consolidation of ANZ’s retail and wealth business.

The bank’s net interest margin, a common indicator of profitability, also edged up by 11 basis points to 1.85%. Net fee income also hit $706m in Q2 on the back of steady growth in wealth management and cards.

The bank declared a first-half dividend of $60 cents per share in line with the guidance provided at Q4 2017 results announcement.

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DBS, however, was hit by weak trading income which crashed 23% to $227m amidst flat yield curve and wider credit spreads. The bank’s weak trading performance was further aggravated by a lower gain from investment securities.

Other non-interest income plunged 44% due to a 38% decline in trading income and to $86m property disposal gain in the previous quarter. Expenses also rose 12% to $1.42b.

For the first half of the year, non-performing asset formation plunged 53% to $551m. Non-performing assets stood at $5.87b, 3% below end-2017 and little changed from the previous quarter. The NPL rate was at 1.6% and allowance coverage was at 92% and at 173% when collateral was considered.

“Amidst heightened uncertainty and market volatility, business momentum was sustained in the second quarter. Whilst there are gathering clouds, the region’s prospects remain intact, enabling us to continue capturing growth opportunities and generating stronger shareholder returns in the coming quarters,” DBS CEO Piyush Gupta said in a statement.