DBS Group Holdings, Southeast Asia's biggest bank, recorded a bigger-than-estimated 49 per cent increase in third-quarter profit as bad debt provisions fell and net interest income rose.

DBS's net income climbed to $563 million from $379 million a year earlier, beating market estimates of about $480 million.

Net interest income - revenue from borrowers after interest is paid to depositors - rose 6 per cent to $1.1 billion as net interest margins rose to 2.03 per cent from 1.99 per cent.

Deposits increased 1 per cent to $180.2 billion, with the mix shifting towards current and savings accounts. Fee income surged 14 per cent to $361 million for the three months ended Sep 30 compared to the same period last year.

This was helped by stock broking and investment banking, which continued to benefit from improved capital markets, while trade and remittances and credit cards remained strong.

The non-performing loan rate fell from 2.8 per cent in the second quarter to 2.6 per cent mainly due to customer repayments across most markets.