SINGAPORE - Strong loans growth and a hike in fee income lifted DBS' second quarter net profit to $969 million, up 9 per cent from a year ago.

This boosted its first-half earnings to a record $2.2 billion, the bank said on Friday before markets opened. Excluding one-off items, net profit would have been $2 billion.

DBS' net interest income rose 13 per cent in the second quarter to $1.56 billion on the back of higher loan and deposit volumes.

A better net interest margin, which improved 0.05 percentage point to 1.67 per cent during the three months to June 30, also added to the gains.

Fee income increased 5 per cent to $503 million thanks to higher wealth management and card fees, though those were partially offset by lower brokerage commissions.

Other non-interest income, however, put a drag on the bank's bottomline. It fell 44 per cent to $253 million due to a decline in net trading income.

Total income was unchanged at $2.31 billion while expenses rose 7 per cent to $1.05 billion.

Total allowances fell 48 per cent to $128 million as both specific and general allowances fell.

DBS said the good performance in the first half was underpinned by a 3 per cent increase in total income to $4.76 billion.

Higher net interest margin, loan volumes and annuity fee income streams more than offset a decline in market-related income.

Allowance charges were also lower, declining 40 per cent to $279 million, as the non-performing loan rate improved to 0.9 per cent.

DBS has declared a first-half dividend of 28 cents a share, unchanged from the same period last year. The scrip dividend scheme will apply to the dividend.

Chief executive Piyush Gupta said in a statement: "Margins rose, annuity income

remained strong and asset quality improved.

"This broad-based performance enabled us to continue our multi-year track record of solid growth."