DBS Group Holdings reported net profit of $1.80 billion for 1QFY2022, up 30% q-o-q but down 10% y-o-y. Return on equity was 13.1%. Net interest margin rose 3 basis points (bps) q-o-q, the first increase in three years. Asset quality was stable. Specific allowances of 15 bps of loans were partially offset by a write-back of general allowances.
The performance was moderated by a high base for wealth management and Treasury Markets activities a year ago, when buoyant market sentiment and clear market momentum had driven income from both activities to exceptional levels. As a result, total income fell 3% from a year ago to $3.75 billion and net profit was 10% y-o-y. Loans grew 2% q-o-q or $8 billion in constant-currency terms to $416 billion. Non-trade corporate loans rose 2% or $6 billion led by Singapore and Hong Kong across a range of industries. Trade loans grew 5% or $2 billion amidst rising commodity prices. Housing loans and wealth management loans were little changed.
Compared to a year ago, net interest income rose 4%. Loan growth of 8% y-o-y or $30 billion more than offset the impact of a net interest margin decline of 3bps y-o-y. Q-o-q, deposits grew 4% or $18 billion from the previous quarter and 9% y-o-y or $41 billion to $520 billion. Current and savings accounts accounted for 75% of customer deposits.
DBS CEO Piyush Gupta said, “First-quarter business momentum was strong and broad-based, and earnings were second only to the exceptional quarter a year ago. Geopolitical developments in recent weeks have created macroeconomic headwinds and financial market volatility. We have stress tested our portfolio and it remains resilient. While some activities such as wealth management will be affected, our overall business pipeline continues to be healthy and we will benefit significantly from interest rate increases in the coming quarters.”
Shares in DBS closed 11 cents higher or 0.33% up at $33.01 on April 28.
