DBS Q1 net profit up 1% from a year ago

DBS Group Holdings reported on Tuesday that its net profit for the first quarter ended March 31, 2017 rose to a record S$1.21 billion, up 1 per cent from a year ago.

DBS CEO Piyush Gupta said the bank had a good start to the year, with earnings maintained at the quarterly high achieved a year ago as business momentum and productivity gains were sustained. These offset the impact of a lower net interest margin.

"Our business pipeline is healthy, consistent with the recent improvement in economic data for key markets. While asset quality pressures appear to be moderating, we remain vigilant to continued headwinds in the oil and gas support services sector,'' he said.

Including one-time items, net profit was S$1.25 billion, compared to S$1.20 billion a year ago. There was a gain of S$350 million from the divestment of PWC Building in Singapore. The amount was set aside as general allowances, raising general allowance reserves to S$3.49 billion. In addition, S$10 million of integration costs for the retail and wealth management business acquired from ANZ was accrued. The general allowance and integration cost charges had a tax impact of S$45 million.

Net interest income was unchanged from a year ago at S$1.83 billion. The impact of softer Singapore-dollar interest rates was offset by higher loan volumes, which rose 7 per cent in constant-currency terms to S$298 billion from growth in corporate, trade and Singapore housing loans.

Net fee income rose 16 per cent to S$665 million. The growth was led by a 26 per cent increase in wealth management fees to a quarterly high of S$222 million from stronger sales of unit trusts and other investment products.

Transaction service fees increased 11 per cent to S$157 million due to higher trade finance and cash management income. Investment banking fees doubled to S$45 million from increased equity and fixed income fees. Cards and loan-related fees were also higher.

Other non-interest income fell 15 per cent, or S$68 million, to S$390 million due to lower trading gains and a non-recurring net gain of S$38 million a year ago. Income from treasury customer sales was little changed at S$304 million with an increase in wealth management treasury sales offset by a decline in corporate treasury sales.

By business unit, income for consumer banking and wealth management rose 13 per cent to S$1.16 billion. The increase was across all product segments and led by double-digit percentage growth in investment products. Institutional banking income was stable at S$1.32 billion as higher transaction service income was offset by lower treasury customer income. Treasury Markets income fell 39 per cent to S$187 million.

Total income rose 1 per cent to S$2.89 billion. Specific allowances eased from recent quarters as non-performing loan formation moderated. Allowance coverage of non-performing assets was at 103 per cent.