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DBS Q1 profit up 9% to S$1.65b on 'healthy business momentum', higher net interest margin

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DBS Group Holdings' first-quarter profit unexpectedly rose as interest income made up for declines in wealth, investment banking and brokerage fees.

DBS Group Holdings' first-quarter net profit rose 9 per cent to S$1.65 billion from S$1.52 billion a year ago on the back of higher interest rates and growth in non-trade loans.

Earnings per share for the three months ended March 31 came in at S$2.58, compared to S$2.38 previously. DBS is declaring a dividend of 30 Singapore cents per share, consistent with fiscal 2018's full-year payout of S$1.20 per share. The bank will pay dividends on a quarterly basis instead of semi-annually from this year onwards to provide shareholders with a more regular income stream.

DBS shares were indicated at S$28.16 as at 12.46pm on Monday after the results were announced, up 2.74 per cent or S$0.75 on the day.

Total income rose 6 per cent to S$3.55 billion from a year-ago S$3.36 billion. DBS said a healthy business momentum and a higher net interest margin more than offset the impact of a high base for wealth management, brokerage and investment banking fee income, as well as a property gain a year ago.

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Net interest income, which mainly reflects how much more the bank collects on loan interest than from paying interest to depositors, grew 9 per cent to S$2.31 billion. Non-trade customer loans were a key growth driver during the quarter, as were higher interest rates in Singapore and Hong Kong. Net interest margin increased five basis points to 1.88 per cent.

The ratio of non-performing loans was 1.5 per cent, unchanged from end-2018 and slightly better than the 1.6 per cent ratio a year ago. Allowances for credit and other losses fell to S$76 million from a year-ago S$164 million

Net fee income shrank 2 per cent to S$730 million on a base effect, as wealth management, brokerage and investment banking fee income declined 12 per cent due to an "exceptionally buoyant market sentiment" a year ago, the bank said.

In terms of business units, institutional banking profit before tax rose 21.6 per cent to S$1.01 billion amid higher cash management and loan income. Consumer banking and wealth management pre-tax earnings increased 15.2 per cent to S$722 million on higher deposit and bancassurance income, while treasury markets profit before tax increased 35.7 per cent to S$152 million.

 

Overall, return on equity increased 14 per cent, the highest in more than a decade.

For its Singapore business, net profit increased 19 per cent from a year ago to S$1.12 billion as total income grew 7 per cent to S$2.24 billion.