(8 August 2016 – Singapore) DBS Group has reported a net profit for the first half of 2016 of SGD 2.25 billion (A$2.19 billion).
Total income grew 6 percent to SGD 5.78 billion, achieved through diversified growth, with net interest margin at a six-year high and record fee income, the bank said in a statement.
The bank said that due to a net allowance charge of SGD 150 million for its exposure to the Swiber group, second-quarter net profit was six percent lower at SGD 1.05 billion, compared to a year ago.
Total income rose by eight percent, achieving DBS’ new quarterly high of SGD 2.92 billion, largely driven by an uplift in business momentum.
The bank’s loan book increased by four percent in the last quarter, with the DBS stating that corporate borrowing and an increase in home loan market share was responsible.
The cost-income ratio improved to 44 percent as cost growth decelerated. Profit before allowances increased 10 percent to SGD 1.63 billion.
Consumer Banking / Wealth Management income increased 19 percent to SGD 2.09 billion, led by higher income from loans, deposits, and bancassurance. Income from the Wealth Management customer segment rose eight percent to SGD 806 million with assets under management growing 6 percent to SGD 151 billion.
Institutional Banking income was little changed at SGD 2.65 billion. While cash management, capital market, and loan activities grew, trade finance and treasury customer sales were lower due to uncertainty related to China and the renminbi. Treasury income fell 13 percent to SGD 578 million from the high base a year ago.
Total expenses increased six percent to SGD 2.25 billion.
DBS said that its second-quarter net profit was 13 percent below the record earnings in the previous quarter. While total income and profit before allowances were higher, the impact was offset by an increase in total allowances.
The bank maintained a healthy common equity tier 1 ratio of 14.2 percent. DBS reported that its leverage ratio was at twice the minimum of three percent required by the Basel Committee, at 7.7 percent.
DBS chief executive Piyush Gupta said: “We achieved two consecutive quarters of record total income despite a challenging operating environment in the first half. The strong income growth in the second quarter enabled profit before allowances to grow 10 percent.
“Despite an unexpected significant allowance charge, first-half earnings were at a record. The performance demonstrates our ability to consistently capture opportunities across our businesses and effectively manage costs. While there remains some uncertainty in the second half, our business momentum is good and our balance sheet healthy. We are well prepared to meet the challenges ahead.”