DBS Q3 net profit creeps up 1% to $1.07b

Thanks to 8% higher income.

DBS Group reported net profit of $1.07b for 3Q16, little changed from a year ago. An 8% rise in total income to $2.93 billion as well as cost containment resulted in a 19% increase in profit before allowances to a record $1.73 billion. The strong operating results provided substantial headroom for higher general allowances to be taken as a prudent measure. 

The group stated that compared to a year ago, net interest income was little changed at $ 1.82 billion. Net interest margin was stable at 1.77%. Loans rose 5% in constant-currency terms to $ 290 billion. An 8% increase in non-trade loans from regional corporates as well as market share gains in Singapore housing loans was partially offset by a 14% decline in trade loans.

Meanwhile, its non-interest income grew 24% to $1.11 billion. Net fee income rose 19% to $ 614 million from broad-based growth.

"It was led by a 47% increase in wealth management fees to a new high of $ 201 million from stronger bancassurance income. Investment banking fees rose 74% to $ 54 million from higher equity market and fixed income fees as well as higher advisory activities," DBS explained.

On the other hand, card fees increased 15% to $ 123 million as credit and debit card transactions in Singapore continued to rise.Transaction services fees were 11% higher at $ 147 million from growth in cash management fees. Other non-interest income increased 32% to $ 500 million from higher trading income and gains on investment securities. Income from treasury customer sales was stable at $ 308 million.

The group also ctied that the lower expenses paved way for the slight uptick in earnings. Expenses declined 5% to $ 1.20 billion due to lower operating expenses as well as productivity gains.

"While business volumes grew, staff costs were little changed at $ 672 million as bonus accruals declined. A slight increase in full-time employees over the past 12 months was due to the insourcing of certain technology functions as part of strategic cost management efforts; underlying staff numbers were little changed. Profit before allowances rose 19% to $ 1.73 billion," the group underscored.

The group's net profit was 2% higher compared to the previous quarter. Total income was around the strong level of the previous quarter. A decline in expenses was offset by an increase in total allowances as general allowances were taken.

Net interest income was 1% lower. Net interest margin declined 10 basis points to 1.77% in line with lower Singapore-dollar interest rates and as liquidity buffers were built up in anticipation of US money market reform and central bank actions. Loans rose 2% from corporate loans and Singapore housing loans. Trade loans were little changed.

Non-interest income rose 3%. Fee income was 2% lower as investment banking fees fell 35% from a high base in the previous quarter. The decline was offset by higher wealth management and card fees. Other non-interest income grew 9% from an increase in trading income and gains on fixed assets.

Expenses were 7% lower due partly to non-recurring expenses in the second quarter as well as lower bonus accruals. Profit before allowances was 6% higher