DBS still upbeat on loan growth even as China trade slows

CEO Gupta is guiding for 6% growth.

DBS is still upbeat on its full-year loan growth even though trade loans to China contracted sharply in the first quarter.

According to a report by OCBC Investment Research, DBS CEO Piyush Gupta expects the group’s loan book to grow 6% this year on a constant currency basis.

“For this quarter, management explained that while the group enjoyed higher corporate and mortgage loans, this was offset by a decline in trade loans. The latter fell about 8% due to the contraction in China trade,” OCBC noted.

China trade loans fell due to lower commodity prices as well as onshore-offshore RMB interest rate convergence from a difference of 2.4% in Jul 2014 to 0.7% in March 2015.

Gupta also expects the group’s net interest margin to improve in the second quarter as most SIBOR benefit to accrue in this period.