Singapore’s DBS Bank delivered record third-quarter results on continued growth in loan, fee income trends and net interest margin progression. 

DBS rounded up the quarterly results reporting season for lenders in Singapore on Monday. Business momentum pushed total income to a record S$3.38 billion ($2.46 billion), up 5 percent from the previous quarter and 10 percent from a year ago, the bank said in a statement. For the nine months, total income grew 12 percent to a new high of S$9.94 billion.

Higher Loan Volumes 

Net interest income grew 15 percent to S$2.27 billion, due to increases in loan volumes and net interest margin. Loans expanded 8 percent to S$340 billion, led by consumer and non-trade corporate loans. Net interest margin rose 13 basis points to 1.9 percent, in line with the rising interest rate environment in Singapore and Hong Kong. Net fee income, however, rose by only 1 percent to S$695 million, as increases in broad-based activities were offset by a two-thirds decline in investment banking fees. 

«Third-quarter business momentum was sustained amidst heightened geopolitical and economic headwinds. Year-to-date earnings per share is the highest in our history while return on equity is the best in more than a decade,» said DBS chief executive Piyush Gupta.

Slightly More Positive Tone

The bank expects two to four rate hikes by the Federal Reserve next year to translate into a U.S. stronger dollar, and have high pass-through to Singapore and Hong Kong interest rates, according to the company presentation. The bank chief's tone has turned slightly more optimistic from the second quarter, where he was concerned about the «spillover effects» from U.S.-China trade tensions and deleveraging moves in China.

The trade war impacted mostly market sentiment, which explains the dent in investment banking fee. However, Gupta does not expect the trade war to have a direct impact on the economy yet. He projects mid single-digit loan growth and small progress in net interest margins next year, as higher interest rates flow through into its loan books. 

Despite the higher cost of funds amidst a tighter supply of deposits, the bank's chief said he is «not that concerned yet» during the bank's media briefing. «As rates go up, we expect to continue to reprice the loan book.»