DBS Q1 profit falls to 2.5-year low on coronavirus loan loss provisions

[SINGAPORE] Singapore's DBS Group Holdings set aside S$1.09 billion to cover the impact of the coronavirus pandemic as South-east Asia's biggest lender reported a 29 per cent fall in first-quarter profit to the lowest in 2.5 years.

DBS said provisions for credit losses surged in January-March from S$76 million a year earlier. They were well above an average estimate of S$605 million, according to Refinitiv data.

First-quarter profit fell to S$1.16 billion compared with S$1.65 billion a year earlier, in line with an average estimate of S$1.13 billion from four analysts, according to Refinitiv data.

DBS said it set aside the allowances "to accelerate the build-up of reserves", with two-thirds of the amount kept for general allowances to anticipate a "deeper and more prolonged economic impact from the pandemic." The remainder was for specific allowances, mainly for new exposures recognised as non-performing during the quarter.

The bank, which pays quarterly dividends, retained its proposed dividend of 33 Singapore cents per share for the latest quarter. 

The lender joins a host of international banks including JPMorgan Chase & Co and HSBC Holdings in setting aside hefty provisions for bad debts, as the pandemic cripples the global economy and slashes profits among the lenders' corporate customers.

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Net interest income grew as key interest rates were resilient despite the US Federal Reserve's cut in March.

Investors will focus on any comments from chief executive officer Piyush Gupta on the full-year outlook and on dividend prospects at a media briefing which is due to start at 10.30am. 

DBS shares closed S$0.13 or 0.7 per cent higher at S$19.20 on Wednesday.

REUTERS, BLOOMBERG

Read more: DBS' O&G portfolio makes up largest chunk of loans to industries hit by Covid-19