SINGAPORE (May 2): DBS Group reported 1Q net profit rose to a record $1.21 billion, up 1% from a year ago on record fee income.
Total income rose 1% to $2.89 billion. Expenses declined 1% to $1.25 billion as productivity gains arising from concerted digitalisation and cost management efforts enabled the bank to support higher business volumes with fewer resources.
Net interest income was unchanged from a year ago at $1.83 billion. The impact of softer Singapore-dollar interest rates was offset by higher loan volumes, which rose 7% in constant-currency terms to $298 billion from growth in corporate, trade and Singapore housing loans.
Net fee income rose 16% to $665 million. The growth was led by a 26% increase in wealth management fees to a quarterly high of $222 million from stronger sales of unit trusts and other investment products.
Transaction service fees increased 11% to $157 million due to higher trade finance and cash management income. Investment banking fees doubled to $45 million from increased equity and fixed income fees. Cards and loan-related fees were also higher.
Other non-interest income fell 15% to $390 million due to lower trading gains and a non-recurring net gain of $38 million a year ago. Income from treasury customer sales was little changed at $304 million with an increase in wealth management treasury sales offset by a decline in corporate treasury sales.
Including one-time items, net profit was $1.25 billion. This included a gain of $350 million from the divestment of PWC Building in Singapore which was set aside as general allowances, raising general allowance reserves to $3.49 billion.
Compared to the previous quarter, the amount of non-performing assets fell slightly to $4.83 billion. The non-performing loan rate was unchanged at 1.4%.
Non-performing loan formation, which had been elevated in recent quarters due to stresses in the oil and gas support services sector, moderated and was offset by recoveries and write-offs.
Specific allowance charges amounted to $200 million or 26 basis points of loans, compared to 38 basis points for full-year 2016.
Allowance coverage was at 103% and at 217% when collateral was considered.
The Common Equity Tier-1 ratio rose 0.5 percentage points from the previous quarter to 14.6%.
DBS CEO Piyush Gupta said, “We have had a good start to the year. Earnings were maintained at the quarterly high achieved a year ago as business momentum and productivity gains were sustained, offsetting the impact of a lower net interest margin.
Our business pipeline is healthy, consistent with the recent improvement in economic data for key markets. While asset quality pressures appear to be moderating, we remain vigilant to continued headwinds in the oil and gas support services sector. Our diversified business lines, nimbleness in execution and strong balance sheet put us in good stead for the coming year.”
Shares of DBS closed 14 cents higher at $19.35 last Friday.
