REUTERS - Shares in DBS Group Holdings rose to their highest in two months, heading towards their biggest daily rise in three weeks on better-than-expected quarterly results.
The biggest bank in Southeast Asia reported a 10 per cent rise in quarterly profit, boosted by strong growth in loans and higher fees.
DBS shares rose as much as 2.3 per cent to $17.09 in early trade, among the top three performers on Singapore's Straits Times Index. The index was up 1 per cent.
The bank gave up its bid on Wednesday to take a controlling stake in PT Bank Danamon Indonesia as Indonesia's central bank had only allowed it to take as much as 40 per cent stake.
"The lapse of the purchase agreement between DBS and Fullerton (Temasek) to purchase Bank Danamon is a near-term positive catalyst in our view, as it removes uncertainty over capital and could result in higher dividends going forward,"Barclays said in a research note.
Smaller rivals Oversea-Chinese Banking Corporation and United Overseas Bank rose more than 1 per cent each.
"Singapore banks are defensive to potential liquidity tightening in Emerging Markets in Asia and are key beneficiaries from the rising interest rates in the medium term," Barclays said.
"However, we see a lack of near-term positive catalysts as strong loan growth will likely be offset by some margin pressure." UOB is due to report later in the day and OCBC is expected to release its earnings on Friday.