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

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.

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.

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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.

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