Record High at DBS Wealth Unit

Piyush Gupta, CEO, DBS Bank

Piyush Gupta, CEO, DBS Bank

Singapore's largest bank DBS, has reported a 6 percent fall in second-quarter profit, missing estimates. The bank has been hindered by growing provisions for bad loans in the weak oil and gas services sector.

DBS Group has reported net profit for the second quarter of 2016 was 1.05 SGD billion, this represented a 6 percent drop from a year ago in part due to a net allowance charge of S$150 million to a local oil and gas services firm, Swiber.

New Record Levels

Income from the Wealth Management segment rose to a new high of 8 percent to 806 SGD million. Similarly assets under management also reached record levels growing 6 percent to 151 SGD billion helped by higher income from loans, deposits and the ongoing bancassurance deal with Manulife.

DBS counts its Mass Affluent units Treasures, Treasures Private Clients and DBS Private Bank figures under the umbrella of «Wealth Management».

A Risky Business

While cash management, capital market and loan activities grew, trade finance and treasury customer sales were lower due to uncertainty related to China and the renminbi. Treasury income fell 13 percent to 578 SGD million from the high base a year ago.

The results today follow the bank's July 28 announcement that it expects to recover only half of its 700 SGD million exposure to local firm Swiber, which provides construction services for international oil and gas projects.

Unexpected Significant Allowance Charge

Swiber filed a petition last week to liquidate its operations, after facing payment demands from creditors. DBS has set aside S$150 million to cover this exposure.

«We achieved two consecutive quarters of record total income despite a challenging operating environment in the first half. The strong income growth in the second quarter enabled profit before allowances to grow 10percent. Despite an unexpected significant allowance charge, first-half earnings were at a record. The performance demonstrates our ability to consistently capture opportunities across our businesses and effectively manage costs. While there remains some uncertainty in the second half, our business momentum is good and our balance sheet healthy. We are well prepared to meet the challenges ahead,» said Piyush Gupta, DBS CEO.

More to follow... 

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