DBS Q1 profit up 9% to $1.65b

Strong interest income offset declining wealth management, brokerage and investment banking fees.

DBS profits rose 9% YoY to $1.65b in Q1 as strong interest income more than cushioned the impact of declining earnings from wealth management, brokerage and investment banking, the bank said in its financial statement. On a quarter-on-quarter basis, profits surged 25%. 

Net interest income rose 9% to $2.31b with loans growing 5% to $347b. The loan growth was driven by non-trade corporate loans and consumer loans which rose 11% and 3% respectively to offset an 11% decline in trade loans. Net interest margin, a common measure of profitability, also expanded 5bp to 1.88% amidst higher rates in Singapore and Hong Kong.

On the other hand, net fee income fell 2% to $730m as wealth management, brokerage and investment banking fee income declined 12% in aggregate which DBS attributes to a high year ago base. Card fees increased 21% to $189m from higher customer transactions across the region. Transaction service fees and loan-related fees rose to $188m and $108m respectively.

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Other non-interest income rose 5% to $511m as increases in trading income and net gain on investment securities more than offset a property gain of $86m a year ago. Trading income rose 20% to $443m from gains in interest rate and credit activities. Net gain on investment securities also doubled to $53m from a low year-ago base.

Asset quality continued to be benign with non-performing assets (NPA) remaining stable from the previous quarter at $5.6b as new non-performing asset formation remained low. The bad loan ratio also held steady at 1.5%. Total allowances fell to $76m, half the level a year ago and two-fifths the previous quarter.

Deposits were stable from the previous quarter and rose 5% from a year ago to $395b. The liquidity coverage ratio of 137% and the net stable funding ratio of 111% were both above the regulatory requirement of 100%. Similarly, the Common Equity Tier-1 ratio rose 0.2 percentage points from the previous quarter to 14.1% as earnings accretion outpaced risk-weighted asset growth.

The bank declared a dividend payout of 30 cents per share and that dividends will be paid four times a year instead of twice annually.