DBS Group Holdings outshone expectations with a sparkling set of numbers for the first quarter, thanks to higher interest rates and loans growth as well as a property sale gain in Hong Kong.
Net profit shot up 21 per cent to $1.5 billion - exceeding the expectations of analysts polled by Bloomberg who had forecast earnings of $1.4 billion.
The shares surged 84 cents, or 2.8 per cent, to close at $30.84 on the back of the stellar result.
Total income in the three months to March 31 rose 16 per cent to $3.36 billion, led by broad-based loan and non-interest income growth, as well as higher net interest margins.
Chief executive Piyush Gupta told a briefing yesterday that he expects "a fairly strong year for DBS" as the global growth momentum is still robust and "the opportunities that we see are continuing to stay for us".
Net interest income increased 16 per cent to $2.13 billion from higher loan volumes and net interest margin.
16% Increase in DBS' total income in the three months to March 31, led by broad-based loan and non-interest income growth, as well as higher net interest margins.
13% Increase in loans, or $39 billion in constant-currency terms, to $328 billion from growth across trade, corporate and consumer loans.
17% Increase in consumer and wealth management income to $1.4 billion.
Loans expanded 13 per cent, or $39 billion in constant-currency terms, to $328 billion from growth across trade, corporate and consumer loans, including $9 billion from the consolidation of the retail and wealth management business of ANZ.
Income and loans growth from small and medium-sized enterprises (SMEs) has been strong, but it was slow for the bank's large corporate customers, said Mr Gupta.
Corporate income was flat in the quarter, while SME income rose 9 per cent.
Net interest margin (NIM) - the difference between interest income generated and the amount of interest paid to lenders - rose nine basis points from a year earlier to 1.83 per cent from a higher Singapore dollar and elevated United States and Hong Kong dollar interest rates.
DBS is on track for full-year NIM of at least 1.85 per cent and may even exceed that by one to two points if there are three more US Federal Reserve rate hikes and there is pass through to local Sibor/ SOR rates, said Mr Gupta.
He added that he would not be surprised if there are even four rate hikes by the US Fed this year.
Net fee and commission income rose 12 per cent to $744 million, led by higher bancassurance and unit trust sales.
Card fees rose from higher credit card and debit card transactions, as well as the consolidation of the retail and wealth management business acquired from ANZ.
Consumer and wealth management income rose 17 per cent to $1.4 billion. Wealth management income rose by a strong 28 per cent, while retail was up 8 per cent. Assets under management gained 22 per cent to $208 billion, with $22 billion from ANZ.
Housing loan market share remains at 31 per cent and Singdollar savings account market share was 52 per cent.
New home loan sales were $2.5 billion in the first quarter.
Other non-interest income rose 25 per cent to $488 million. There was an $86 million gain from the sale of a Hong Kong property.
Net trading income was also higher, partially offset by a fall in net income from investment securities.
Expenses increased 12 per cent to $1.4 billion. Excluding the consolidation of ANZ and a non-recurring item, underlying expenses were 6 per cent higher.
Non-performing assets (NPA) fell 4 per cent from the previous quarter, while the non-performing loan (NPL) rate eased to 1.6 per cent from 1.7 per cent. NPL ratio was 1.4 per cent in the first quarter last year.
Mr Gupta said asset quality is "looking very good", with new NPA formation of $195 million at a four-year low.
The return on equity (ROE) was 13.1 per cent, the highest in a decade. ROE was 11.1 per cent a year ago.
Mr Gupta said he expects full-year ROE to be at 12.5 per cent.