Singapore’s DBS Bank delivered disappointing results due to a weak second-quarter trading performance. However, half-year results reached a new record.
DBS kicked off the quarterly results reporting season for lenders in Singapore on Thursday. But southeast Asia’s biggest lender reported lower-than-expected second-quarter profit.
Net profit was 10 percent below the previous quarter’s record due to the weaker trading performance and the absence of a property disposal gain. Business momentum was healthy, the bank said in a statement. In early afternoon trade, DBS shares had dropped as much as 2.9 percent to S$26.14, their biggest fall in nearly a month.
Growth in Loans and Fees
DBS' net profit for the first-half increased 23 percent to S$2.89 billion ($2.12 billion) – a record. Broad-based growth in loans and fee income, as well as a higher net interest margin, propelled total income to a new high of S$6.56 billion, up 13 percent. Specific allowances halved, in line with non-performing asset formation. Return on equity stood at 12.5 percent.
«The record first-half earnings demonstrate once again the breadth and quality of our franchise, while the higher returns demonstrate the improved profitability of our businesses as interest rates and credit costs normalize,» DBS CEO Piyush Gupta said.
Gathering Clouds
The DBS chief is concerned about the "spillover effects" from US-China trade tensions, deleveraging moves in China, plus weakening Asian currencies, according to its company presentation. On home grounds, the lender expects "some impact" on property loan growth due to the recent slew of cooling measures
«While there are gathering clouds, the region’s prospects remain intact, enabling us to continue capturing growth opportunities and generating stronger shareholder returns in the coming quarters,» he added.
United Overseas Bank, UOB, reports results on Friday, followed by Oversea-Chinese Banking Corp, or OCBC, on Monday.
