SINGAPORE – DBS Group Holdings posted on Thursday (Aug 5) a 37 per cent jump in second-quarter net profit to a quarterly record of $1.7 billion amid higher fee income and lower allowances.
Its earnings topped the $1.47 billion average estimate of three analysts polled by Bloomberg.
The board has declared a dividend of 33 cents per share for the second quarter, compared to 18 cents a year ago, bringing the first-half dividend to 51 cents per share. This follows the Monetary Authority of Singapore’s lifting of restrictions that capped dividend payouts from local banks and finance companies at 60 per cent of the previous year’s dividend amid the Covid-19 pandemic.
Singapore’s largest lender’s latest earnings dipped 15 per cent from its all-time high of $2.01 billion in net profit in the first quarter.
DBS chief executive Piyush Gupta said business momentum and asset quality have both been better than expected as the economic recovery from the pandemic takes hold.
“While risks remain, our pipeline remains healthy and we expect business momentum to be sustained in the coming quarters,” he said.
The lender’s net interest income fell 9 per cent year-on-year to $2.09 billion in the second quarter. Net interest margin – a key gauge of banks’ profitability – dropped 17 basis points to 1.45 per cent and more than offset broad-based loan growth.
Fee income amounted to $868 million, the second highest after the previous quarter’s record and up 27 per cent from a year ago.
The growth was led by a 31 per cent rise in wealth management fees. Investment banking fees more than doubled and card fees rose 26 per cent as financial market activity and consumer spending recovered from the trough a year ago, said DBS.
Other non-interest income stood at $632 million, 15 per cent lower than a year ago and 20 per cent below the previous quarter.
“The declines were due to lower trading income in comparison with the two strongest trading quarters on record and higher investment gains a year ago,” said DBS.
DBS set aside lower allowances of $79 million in the second quarter, down 91 per cent from a year ago, as the economic environment improved.
The bank said new non-performing asset formation declined to pre-pandemic levels and was significantly offset by repayments in both the first and second quarter.
Net profit for the first half rose 54 per cent to $3.71 billion.
DBS’ results wrap up local banks’ earnings season. OCBC’s second-quarter net profit rose 59 per cent from a year ago to $1.16 billion, while UOB’s climbed 43 per cent to $1 billion, both also beating forecasts.
