DBS also reported a sterling set of results, with net interest income and net profit buoyed by higher net interest margins — much of it thanks to the Fed. Its 3QFY2022 net profit rose 32% y-o-y and 23% q-o-q to $2.236 billion. Net interest income surged 44% y-o-y and 23% q-o-q to $3.02 billion. This seemed to be in line with the guidance given by DBS that its NII would rise by some $2 billion in a 12-month period should the interest rate rise by 100 bps. Interest rates have actually risen faster and further than projections made in 2021 and DBS was always going to be the main beneficiary.
Earnings released for the 3QFY2022 ended September by United Overseas Bank (UOB) on Oct 28 and DBS Group Holdings on Nov 3 reflected the positive impact of the US Federal Reserve’s interest rate hikes, which started in earnest in June. Since the start of the year, the US Fed has hiked rates by 50 basis points (bps) in March, and 75 bps each in June, July, September and October. Hence the real acceleration in earnings took place in the local banks’ third quarter.
UOB’s 3QFY2022 net profit of $1.4 billion, up 34% y-o-y and 26% q-o-q, was a record, underpinned by a $1.86 billion net interest income (NII), up 39% y-o-y and 20% q-o-q. Net profit for the nine months to Sept 30 of $3.46 billion was up 12% y-o-y.
