SINGAPORE: DBS Group Holdings Ltd, Singapore's biggest lender, reported a 33 per cent increase in quarterly profit that came in line with market expectations, boosted by a strong rise in net interest income.
It reported net profit of S$1.2 billion (US$905.3 million) for October-December versus S$913 million a year earlier, and compared with the S$1.2 billion average estimate of six analysts compiled by Thomson Reuters.
Net interest income, which refers to interest it earns from loans, increased 15 per cent to S$2.1 billion, in line with higher Singapore-dollar interest rates, the bank said.
Net interest margin, which is the difference banks make from the interest it earns through giving out loans and the interest it pays out to customer deposits, came in at 1.78 per cent compared to 1.71 per cent a year ago.
DBS chief executive Piyush Gupta had said in a press conference that he expects a higher net interest margin in 2018, citing expectations of an improving interest rate environment to provide this uplift.
Meanwhile, the bank’s non-performing loan rate rose from 1.4 per cent in the fourth quarter, compared to 1.7 per cent a year earlier. Compared to the previous quarter, it was unchanged at 1.7 per cent.
For the full year, DBS’ net profit rose 4 per cent to a record S$4.39 billion, versus S$4.24 billion a year earlier.
The improvement was attributed to broad-based loan growth and record fee income, which more than offset the impact of softer interest rates and weaker trading income.
Mr Gupta also said in a statement that the results attest to the quality of the bank's multiple business engines, adding that the lender will enter the coming year with “sustained momentum” across its businesses and, more fundamentally, in its digital transformation.
DBS is the first of Singapore’s three lenders to report its fourth-quarter results, with UOB and OCBC to follow on Feb 14.
(Additional reporting by Brandon Tanoto.)