DBS 2Q profit tops estimates as banks benefit from rising interest rates

SINGAPORE (Aug 4): Singapore’s DBS Group reported a 7% rise in quarterly net profit that came in slightly above market estimates and gave a robust outlook as Southeast Asia’s largest lender gains from sharply higher interest rates.

Singapore banks are also benefiting from a rebound in economic activity in the Asian financial hub after the government relaxed most of its Covid-19 restrictions in April.

DBS reported its net profit for April-June increased to S$1.82 billion (US$1.30 billion) from S$1.7 billion a year earlier, compared with an average estimate of S$1.69 billion from five analysts compiled by Refinitiv.

“Net interest margin rose for the first time in three years and accelerated in the second quarter, while business momentum and asset quality were sustained,” DBS chief executive officer Piyush Gupta said in the results statement on Thursday.

“Our ongoing stress tests indicate that asset quality continues to be robust,” he said.

The results from DBS rounded up a strong reporting season for Singapore banks after local peers OCBC beat estimates and United Overseas Bank flagged further improvement in net interest margins.

DBS’ net interest margin increased to 1.58% in the quarter from 1.45% a year earlier and it said the key profitability gauge topped 1.8% in July.

The bank maintained its full-year loan growth forecast at mid-single digit percent.

Net fee income fell 12% in the second quarter due to lower contributions from wealth management and investment banking that more than offset increases in other fee activities.