Improved margins and more favourable interest rates allowed DBS to post a better-than-expected set of numbers for the third quarter, including a record high for net interest income.
Net profit for the three months to Sept 30 rose 6 per cent to $1.07 billion over the same period last year and comfortably above the $994 million tipped in a Reuters poll.
Revenue went north as well, up 8 per cent to $2.71 billion.
Earnings per share came to $1.67, up from $1.61 a year ago, and net book value stood at $15.42 per share.
The profit growth came as its net interest margin rose to the highest since the second quarter in 2011 at 1.78 per cent compared with 1.68 per cent a year ago.
AT A GLANCE
REVENUE: $2.71 billion (+8%)
NET PROFIT: $1.07 billion (+6%)
NET INTEREST MARGIN: 1.78% (+10 basis points)
Like UOB, which reported an increase in third-quarter net interest margin to 1.77 per cent last week, DBS benefited as loans were repriced in line with the rising interbank and swap offer rates.
With loans growing by 9 per cent year on year to $285 billion, total net interest income for the bank was up 13 per cent to a record $1.81 billion.
Notably, DBS' mortgage business stayed strong despite the tepid housing market.
"New (housing) loans booking in the last quarter, at about $3.3 billion, was at a two- to three-year high," said chief executive Piyush Gupta at a results briefing yesterday.
The demand came partly from property refinancing and resales.
DBS noted that it has a 26.2 per cent share of the local mortgage market.
While loans grew, the bank reported that overall asset quality has remained healthy. The non-performing loans (NPL) ratio was 0.9 per cent, unchanged for the fifth straight quarter.
Mr Gupta added that the bank is comfortable with its loan exposure to the struggling oil and gas sector. Stress tests have shown that only 5 per cent of its portfolio would be affected if low oil prices persisted for the next 24 months.
But DBS was not immune to the equity and money market volatility in the third quarter, with net fee and commission income down 7 per cent year on year to $517 million.
Investment banking income dropped 65 per cent to $31 million while wealth management income was down 4 per cent to $137 million.
Trading income also took a one-time $50 million charge in the quarter to account for the funding valuation adjustments to the fair value of over-the-counter derivatives.
DBS is the first Asian bank to adopt the practice, without which third-quarter net profit would have been up 10 per cent, Mr Gupta noted.
Mr Gupta told the briefing that while fee income took a hit in the quarter, the impact is likely short term and DBS is poised for robust growth into 2016.
"We think we can get a 5 to 6 per cent growth rate in the loan business, margins can hold; our fee business can have strong double- digit growth and treasury business can grow at a high single digit.
"Putting all that together, our core business should be able to deliver a 7 to 8 per cent top-line growth. We're comfortable about being able to negotiate through the next year or two."
Following the results announcement, DBS shares closed down two cents or 0.12 per cent to $17.25.