DBS posts US$1.3b net profit in Q1, second-highest on record

Wealth and investment banking fees were lower after 2021’s exceptional year.

DBS Group is off to a strong start for the first quarter of the year, reporting a net profit of S$1.8b (approximately US$1.3b) for the period–30% higher than the previous quarter, according to its latest trading update.

Whilst this was 10% lower than Q1 2021’s record-breaking S$2.01b, the results are still their second-highest first-quarter net profits on record.

Results were moderated by the high base for wealth management and Treasury Markets activities in 2021, when buoyant market sentiment and clear market momentum had driven income from both activities to exceptional levels, according to DBS.

The board has declared an interim dividend of 36 cents for each DBSH ordinary share for the first quarter of 2022, for a total estimated dividend payable of S$926m.

Loans grew 2% over the quarter, whilst fee income streams other than wealth management and investment banking were higher than a year ago. Return on equity was 13.1%. 

The bank’s net interest margin also rose three basis points from the previous quarter, the first increase in three years. 

Some fees reported falls compared to the previous year. Net fee income fell 7% from the record a year ago to S$891m, hampered by weaker market sentiment. Wealth management fees fell 21% to S$408m, with declines in investment product sales mitigated by higher bancassurance income. 

Investment banking fees also came lower at S$43m, 12% lower than in Q1 2021, as fixed-income activities fell.

Other fees grew. Loan-related fees rose 21% to S$144m, whilst card fees grew 11% to S$187m as credit and debit card spending exceeded pre-pandemic levels and travel picked up. 

Transaction service fees grew 4% to a new high of S$240m on the back of higher cash management fees.

Expenses rose 4% from a year ago to S$1.64b due to base salary increments carried out in mid-2021; however, they were 2% lower than in Q4 2020, more than offset by declines in other operating expenses.

(US$1 = S$1.38b)