DBS Q3 profit rises 31% to $1.7 billion, beating forecasts

SINGAPORE – DBS Group Holdings posted on Friday (Nov 5) a better-than-expected increase in third-quarter earnings on improved asset quality and higher fee income at Singapore’s largest lender. 

Net profit rose to $1.7 billion, topping the $1.56 billion forecast by analysts in a Bloomberg poll.

DBS has declared a dividend of 33 cents per share for the third quarter, up from 18 cents a year ago, bringing the dividend for the first nine months to 84 cents a share.

This follows the Monetary Authority of Singapore’s lifting of restrictions in July that capped dividend payouts from local banks and finance companies at 60 per cent of the previous year’s dividend amid the coronavirus pandemic.

DBS chief executive Piyush Gupta said broad-based business momentum was sustained in the third quarter and the bank’s pipelines remain healthy into next year.

“A progressive normalisation of interest rates in the coming quarters will be beneficial to earnings. Asset quality continues to be resilient and total allowances are likely to remain low,” he said.

He added that these factors will offset expected cost pressures as the economic recovery takes hold.

DBS’ net interest income fell 3 per cent to $2.1 billion. Net interest margin – a key gauge of banks’ profitability – decreased 10 basis points to 1.43 per cent and was moderated by broad-based loan growth.

Fee income stood at $888 million, the second highest after the first quarter’s record of $953 million. It rose 11 per cent from a year ago due to higher wealth management, transaction services and card fees.

Other non-interest income amounted to $569 million, down 6 per cent from a year ago, as higher trading gains were more than offset by a decline in investment gains.

But DBS also wrote back general allowances of $138 million as its portfolio quality improved, bringing the nine-month write-back to $413 million. 

After setting aside $68 million in specific allowances, total write-back for the quarter came to $70 million, compared with the $554 million it set aside a year ago. 

DBS’ net profit was flat compared with the previous quarter. Earnings for the first nine months stood at $5.41 billion, up 46 per cent from a year ago.