SINGAPORE - DBS Group Holdings posted on Friday (April 29) a drop in first-quarter earnings from its record profit a year ago, as a rise in interest rates was partly offset by lower fee income with the bank's wealth management businesses hit by weaker markets.

DBS' net profit fell 10 per cent to $1.8 billion, topping the $1.62 billion forecast by financial data platform Refinitiv. It was also the bank's second-highest quarterly results.

The board has declared a dividend of 36 cents per share for the first quarter. The estimated dividend payable is $926 million.

The Singapore bank's latest earnings were lower than the $2.01 billion it reported a year ago - the first time quarterly earnings crossed the $2 billion mark and the first growth it had then in more than a year.

DBS said its performance was moderated by a high base for wealth management and treasury market activities a year ago, when buoyant market sentiment and clear momentum had driven income from both activities to exceptional levels.

Chief executive Piyush Gupta said first-quarter business momentum was strong and broad-based.

"Geopolitical developments in recent weeks have created macroeconomic headwinds and financial market volatility. We have stress-tested our portfolio and it remains resilient.

"While some activities such as wealth management will be affected, our overall business pipeline continues to be healthy and we will benefit significantly from interest rate increases in the coming quarters," he said.

Mr Gupta added that loans are expected to grow 1 per cent to 2 per cent in the second quarter, bringing loan growth for the first half of the year to around 3 per cent to 4 per cent. 

For the whole of 2022, loans are expected to rise by a mid-single-digit percentage if momentum slows in the second half of the year, the CEO said. DBS previously said it expects mid- to high-single-digit loan growth this year. 

Net interest income for the first quarter rose 4 per cent year on year to $2.19 billion amid higher interest rates.

Net interest margin - a key gauge of a lender's profitability - dropped three basis points to 1.46 per cent. This offset loan growth of 8 per cent or $30 billion.

Net fee income fell 7 per cent from a record a year ago to $891 million as weaker market sentiment affected wealth management and investment banking.

Other fee income activities were higher. Loan-related fees grew 21 per cent to $144 million, while card fees rose 11 per cent to $187 million as credit and debit card spending exceeded pre-pandemic levels and travel spending picked up.

DBS' latest revenue dipped 3 per cent year on year to $3.75 billion. Expenses stood at $1.64 billion - 4 per cent higher than a year ago due to base salary increments carried out in the middle of last year.

Its latest earnings were 30 per cent higher than in the previous quarter amid higher total income from broad-based growth.