DBS profit jumps 32% to record on rates, signals upbeat outlook

  • Net profit of S$2.24 billion in the third quarter compared to S$1.97 billion
  • Return on equity jumps to a record 16.3%
  • CEO says asset quality remains resilient
  • Banks take advantage of rising interest rates

SINGAPORE, November 3 (Reuters) – DBS Group (DBSM.SI) announced a 32% jump in quarterly profits, beating forecasts, to a record high and gave a bullish outlook on Thursday, as higher interest rates boosted net interest margins in North Asia’s largest lender. South East.

Banks around the world have benefited from an increase in net interest income as central banks raise rates to combat soaring inflation, although analysts warn they could suffer if higher rates led to a sharp slowdown in economic activity.

Shares of DBS, however, fell 1.6% in early trade Thursday, as the broader Singapore market fell around 1%.

UOB Local Peer Group (UOBH.SI) beat market estimates last week with record quarterly net profit as net interest income swelled and loan provisions declined. OCBC (OCBC.SI) reports results on Friday.

Net profit for Singapore-based DBS came to S$2.24 billion ($1.58 billion) in July-September, beating an average estimate of S$1.97 billion from four analysts , according to data from Refinitiv.

The bank saw sustained business momentum in the quarter and asset quality held up, DBS CEO Piyush Gupta said in a statement. Looking ahead to next year, he said the lending pipeline remained healthy and could reach mid-single-digit growth.

While the bank’s net commission and fee income fell 13% in the quarter, hurt by weak wealth management business in depressed markets, Gupta expects double-digit fee income growth for next year, driven by wealth management and credit cards.

DBS’ return on equity reached a record 16.3% in the quarter and net interest income jumped 44%. Its net interest margin, a key indicator of profitability, improved to 1.90% during the quarter against 1.43% a year earlier.

Shares of Singaporean banks have risen 4-6% so far this year, outperforming the broader market on expectations of a sharp expansion in their net interest margins.

Reporting by Anshuman Daga; Editing by Muralikumar Anantharaman and Richard Pullin

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