DBS Q2 profit jumps 17%to $1.6b, beating market estimates

DBS, the first Singapore bank to kick off the sector's results, maintained its mid-single-digit per cent loan growth forecast for the full year.
DBS, the first Singapore bank to kick off the sector's results, maintained its mid-single-digit per cent loan growth forecast for the full year.PHOTO: ST FILE

SINGAPORE - DBS Group Holding's second quarter net profit before one-time items rose 17 per cent to $1.60 billion from $1.37 billion a year ago on the back of higher total income as business momentum from the first quarter was sustained into the second quarter, the group said on Monday (July 29).

This beat an average estimate of $1.47 billion from three analysts, according to data from Refinitiv.

Net profit including one-time items for the year-ago quarter jumped 20 per cent to $1.60 billion from $1.33 billion a year ago.

One-off items totalling $38 million for Q2 2018 include ANZ integration costs and a remeasurement of deferred taxes due to a change in the applicable tax rate arising from the conversion of the bank's India branch to a wholly-owned subsidiary.

Annualised earnings per share (EPS) stood at $2.47, up from $2.12 a year ago. A one-tier tax exempt dividend of 30 Singapore cents per share has been declared for the quarter, unchanged from the previous quarter.

This comes as the bank pays dividends on a quarterly basis instead of semi-annually from this year onwards to provide shareholders with a more regular income stream.

DBS shares last closed at $26.88 on Friday, down three Singapore cents or 0.11 per cent.

Total income for the three months ended June 30 rose 16 per cent to $3.71 billion from $3.20 billion a year ago, led by loan growth, net interest margin progression and higher fee income.

Net interest income, which mainly reflects how much more the bank collects on loan interest than from paying interest to depositors, increased 9 per cent to $2.43 billion from $2.22 billion, due to loans growing 5 per cent in constant-currency terms. Net interest margin meanwhile improved six basis points to 1.91 per cent from 1.85 per cent a year ago.

Net fee income rose 9 per cent to "a new high" of $767 million, driven by investment banking, wealth management and cards. Wealth management fees grew 11 per cent to $332 million on higher investment product sales, card fees rose 16 per cent to $198 million on higher activities in the region, while investment banking fees were up 44 per cent to $56 million on the back of higher debt and equity capital market income.

For the first half of 2019, net profit before one-off items increased 12 per cent to a record $3.25 billion from $2.89 billion a year ago. Including one-offs for the year-ago period of $48 million, half-year earnings rose 14 per cent from $2.85 billion in the prior year.

Annualised EPS stood at $2.52, up from $2.25 the year prior.

Total income was up 11 per cent to $7.26 million, from $6.56 million the year before. This was from corporate loan growth, a higher net interest margin and record fee income, along with an improved trading performance. Net fee income meanwhile rose 3 per cent to $1.50 billion from $1.45 billion a year ago.

DBS CEO Piyush Gupta said: "The results reflect the strengths of an entrenched broad-based franchise that is well placed to nimbly navigate market volatility and capture opportunities as they arise."

DBS, the first Singapore bank to kick off the sector's results, maintained its mid-single-digit per cent loan growth forecast for the full year.