SINGAPORE: Southeast Asia’s biggest lender DBS Group Holdings announced on Monday (Jul 29) that it beat market estimates by reporting a 17 per cent increase in second-quarter profit, supported by a rise in net interest income.

The Singaporean bank’s net profit came in at S$1.6 billion in the three months ending June, versus S$1.37 billion a year earlier and an average estimate of S$1.47 billion from three analysts, according to data from Refinitiv.

Analysts say the outlook for banks is getting challenging, with Singapore’s economy growing at its slowest annual pace in a decade in the second quarter, hit by a drop in manufacturing output and exports.

DBS, the first Singaporean bank to kick off the sector’s results, maintained its mid-single-digit percent loan growth forecast for the full year.

Net profit in the first half of 2019 rose 12 per cent to a record S$3.25 billion, the bank said.

The bank’s net interest income rose by 9 per cent in the latest quarter as loans grew 5 per cent to S$350 billion in constant-currency terms and net interest margin, a key gauge of profitability, improved six basis points to 1.90 per cent, in line with higher interest rates in Singapore and Hong Kong.

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DBS CEO Piyush Gupta said: “We achieved a record half-year performance despite heightened economic uncertainty and geopolitical tensions.

“The results reflect the strengths of an entrenched broad-based franchise that is well-placed to nimbly navigate market volatility and capture opportunities as they arise.” 

The bank’s net fee income rose 3 per cent to S$1.50 billion.

Card fees increased 18 per cent to S$387 million from higher transactions across the region.

Transaction service fees rose 4 per cent to S$370 million from higher cash management fees.

Wealth management fees increased 3 per cent to S$647 million as growth was moderated by a high year-ago base in the first quarter.

Other non-interest income rose 35 per cent to S$1.02 billion.

Trading income was 34 per cent higher at S$800 million from higher gains in interest rate and foreign exchange activities.

Net gain on investment securities more than tripled to S$184 million from a low base.

Income from the Consumer Banking-Wealth Management business unit rose 15 per cent to S$3.17 billion with growth led by deposit and card income.

Institutional Banking income grew 9 per cent to S$3.04 billion from higher cash management income.

Treasury Markets income increased 39 per cent to S$495 million.