DBS shatters profit forecasts as higher interest rates boost loan yields

Wealth management income also ticked up.

DBS had another record-breaking quarter when it reported a net profit of $1.22 billion for the first three months of the year, much higher than consensus forecasts of $1.04 billion. Analysts say that the unexpected profit uptick was due to higher interest rates during the quarter, which boosted the bank's loan yields despite slowing credit growth.

KGI Fraser said in a report that DBS' net interest margin (NIM) rose to 1.85% in Q1 as loan yields rose by 9 bps.

"We see DBS to be in a better position than its local peers in terms of maintaining its current NIM levels, given its highly leveraged position to rising interest rates," KGI Fraser said.

Apart from higher net interest income, DBS also enjoyed stronger fee and commission income from its wealth management segment.

Income from the bank’s wealth management segment reached a record high of $383 million in Q1, as total assets under management (AUM) reached $147 billion. The bank's partnership with Manulife Financial Asia also got off to a good start as bancassurance income grew around 63% to $98mn this quarter.

“We believe DBS’s resilient asset quality and strong capital ratio should provide the bank with sufficient buffer to navigate the near-term headwinds,” KGI Fraser said.