SINGAPORE - DBS Group Holdings beat analysts' forecasts with an 8-per-cent increase in second-quarter net profit to S$1.14 billion in a pre-market announcement on Friday (Aufg 4).
Analysts polled by Bloomberg were expecting a 5.1-per-cent rise in earnings to S$1.11 billion.
But DBS shares fell on Friday after the results were announced as the bank flagged pressures on asset quality. At 10am, the shares were down 2 per cent at S$21.65.
DBS also said it achieved a record net profit of S$2.35 billion for the first half of 2017, up 4 per cent from a year ago, as broad-based loan growth and record fee income offset the impact of a lower net interest margin and weaker trading performance.
Its smaller rivals reported second-quarter earnings last week with Oversea-Chinese Banking Corp beating market expectations with a 22 per cent year-on-year jump in net profit to S$1.08 billion - the highest level in almost three years. UOB also topped forecasts with net profit rising 5.5 per cent to a two-year high of S$845 million.
DBS CEO Piyush Gupta said in a statement, "We achieved strong operating performance in the first half and the business pipeline remains healthy, in line with general economic trends in our key markets.
But he added that: "Asset quality pressures will continue and the risk of heightened credit costs in the oil and gas support services sector will persist with low oil prices."
DBS declared first-half dividends of 33 cents per share, up 10 per cent from recent half-yearly payouts.
"The 10-per-cent increase in dividends reflects the board's confidence in the quality of our earnings and our balance sheet, in particular the strong capital buffers we have built up," said Mr Gupta.
Compared to the first quarter, DBS' second-quarter earnings were 6 per cent lower.
The bank said continued business momentum was offset by lower net interest margin, trading income and gains on investment securities.
Net interest income was 3 per cent higher than a year ago at S$1.89 billion. Loans grew 6 per cent to offset the impact of a 13 basis point decline in net interest margin to 1.74 per cent.
DBS said the amount of non-performing assets was little changed from the previous quarter at S$4.85 billion as non-performing loan formation was offset by write-offs and recoveries. The non-performing loan rate rose slightly from the previous quarter to 1.5 per cent.
Specific allowances for soured loans amounted to S$304 million for the second quarter, bringing the half-year amount to S$504 million.