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Update: DBS' loans to grow 6% in 2015:CEO

DBS Group Holdings expects six per cent loans growth for 2015, said chief executive Piyush Gupta on Monday.

DBS Group Holdings expects six per cent loans growth for 2015, said chief executive Piyush Gupta on Monday.

That is down from the previous estimate of 8 per cent, he said at a press conference on the bank's Q1 results.

DBS posted net earnings of S$1.27 billion for Q1 2015, higher than market expectations of S$1.05 billion.

Excluding one-off item of S$136 million from the sale of an investment property in Hong Kong, net profit increased 10 per cent year-on-year to S$1.13 billion.

"We should grow the loan book, in constant-currency terms, six per cent for full year,'' said Mr Gupta.

Gross customer loans grew two per cent during the quarter to S$284 billion due to currency effects. Loans were little changed in constant-currency terms.

Growth in regional corporate loans and Singapore housing loans was offset by a decline in trade loans.

DBS said trade loans fell eight per cent on quarter to S$46 billion due to the contraction in China trade as growth slowed in the world's second largest economy and also from lower commodity prices. Non-trade loans is increasing across the region, Mr Gupta said. The bank also saw strong demand for Singapore mortgages.

"New bookings in Q1 was the many quarters," he said, adding that in Q1, new bookings came to S$2.1 billion to S$2.2 billion.

Mortgages grew to S$53.9 billion at end-March 2015, up from S$52.9 billion and S$49.8 billion at end-2014 and 31 March 2014, respectively.

The new home loans were mainly refinancing deals to fixed rate loans from floating rate packages. About one third of new home loans were on fixed rate loans, Mr Gupta said.

DBS sells three year fixed rate loans at 2.18 per cent per annum.

"Not many banks can do it, fixed the interest rates for three years but DBS can because of its large deposits,'' he said.

DBS, Southeast Asia's largest bank, saw customer deposits rise two per cent from the previous quarter and eight per cent from a year ago to S$324 billion.

On DBS' newly-minted Manulife bancassurance partnership, DBS expects insurance sales to reach half a billion dollars in a few years, said Mr Gupta.

This year the bank expects to sell S$250 million of bancassurance and it will also get S$106 million from Manulife. DBS gets a total of S$1.6 billion from the 15-year tie-up with Manulife.

Insurance penetration in Singapore is low at four per cent while a country with similar per capita is 12 per cent, he said.

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