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DBS Group posts 9% drop in Q4 profit to S$913m
DBS Group on Thursday reported a 9 per cent drop in net profit for the fourth quarter ended Dec 31, 2016, to S$913 million, as a doubling of total allowances offset improved operating performance.
Total income rose 5 per cent to S$2.78 billion as non-interest income growth more than offset the impact of a lower net interest margin.
DBS said the productivity gains from digitalisation and cost management initiatives resulted in a 2 per cent decline in expenses. This contributed to a 10 per cent increase in profit before allowances to S$1.55 billion.
But allowances for credit and other losses nearly doubled to S$462 million in the fourth quarter from S$247 million a year ago.
Net interest income fell 2 per cent to S$1.82 billion as a decline in net interest margin more than offset the impact of loan growth; non-interest income increased 19 per cent to S$952 million.
For the full year, DBS Group's net profit of S$4.24 billion was 2 per cent below that a year ago as a stronger operating performance was offset by higher allowances.
DBS explained that the strong operating performance provided headroom for higher specific allowances to be taken as the non-performing loan rate rose from 0.9 to 1.4 per cent due largely to stresses in the oil and gas support services sector.