DBS says likely all oil-and-gas provisions taken in Q3; allowances nearly doubled

DBS Bank's chief said it is likely all of the provisions required for the oil-and-gas portfolio have been taken in the third quarter.

"We've been conservative on the collateral values that we've taken," said CEO Piyush Gupta during the bank's media briefing. "I can say with high confidence that we've cleaned the book. We're highly unlikely to take more in the book," he said, referring to provisions for the oil-and-gas segment.

Mr Gupta said that loan growth is likely to be 7 to 8 per cent this year and 2018, and income growth is likely to be around 3 per cent this year and double digit next year.

DBS's housing loan market share rose to over 30 per cent from 27 per cent last year. For the third quarter, the lender booked S$3.9 billion of new home loans, and expects its mortgage book to end the year up S$4-4.5 billion.

DBS's earnings fell 25 per cent for the third quarter from a year ago to S$802 million, as the bank almost doubled its specific provisions for bad debts.

Excluding one-time items such as a S$21 million ANZ integration cost, net profit stood at S$822 million, 23 per cent lower from the preceding period.

In an indication of the extent of weakness in the oil and gas segment, specific allowances for credit and other losses were raised to S$815 million, 87 per cent higher than the S$436 million the bank recorded a year ago.

Total income in the quarter rose to S$3.06 billion, up 4 per cent from a year ago. Net interest income increased 9 per cent year on year to S$1.98 billion, while net fee and commission income rose 12 per cent to S$685 million.

Mr Gupta said that recognising residual weak oil and gas support service exposures as NPAs (non-performing assets) will enable investors to return their focus to the bank's operating performance and digital agenda.

"Business momentum has been strong as we continued to capture opportunities in a reflationary environment across the markets we operate in," he said in a statement. "Broad-based loan and fee income growth propelled third-quarter and nine-month total income and profit before allowances to new highs, more than offsetting the impact of less favourable interest rates and trading income."