SINGAPORE (Aug 2): DBS Group Holdings reported 2Q18 net profit for rose 20% from a year ago to $1.37 billion from a year ago, supported by double-digit percentage growth in net interest income and fee income but moderated by weak trading income. Total income rose 10% to $3.20 billion.
Compared to the previous quarter’s record, net profit fell 10% as other non-interest income declined 44%. Business momentum over the quarter was healthy as consumer and non-trade loan growth, underlying net interest margin progression and overall fee income trends were sustained.
Net interest income increased 18% from a year ago and 5% from the previous quarter to $2.22 billion. Loans increased 12% from a year ago from broad-based growth, and 1% in constant-currency terms from the previous quarter. Net interest margin rose 11 basis points from a year ago and two basis points from the previous quarter to 1.85% from higher interest rates in Singapore and Hong Kong.
Net fee income increased 11% from a year ago to $706 million, led by wealth management and cards. It was 5% below the previous quarter, when buoyant markets resulted in a high base for wealth management fees and brokerage commissions.
Other non-interest income declined 32% from a year ago to $273 million due to lower trading income and gains from investment securities. It was 44% lower compared to the previous quarter, which had also included a property disposal gain.
Expenses were 12% higher than a year ago at $1.42 billion. Excluding the consolidation of the retail and wealth management business acquired from ANZ, they were 5% higher. Expenses rose marginally by 1% compared to the previous quarter. Profit before allowances of $1.79 billion was 8% higher than a year ago and 9% below the previous quarter.
Asset quality was healthy. Non-performing assets were little changed from the previous quarter at $5.87 billion. Total allowances of $105 million were one-third a year ago. Allowance coverage was at 92% and at 173% if collateral was considered.
The liquidity coverage ratio was at 135% and the net stable funding ratio was at 110%. The Common Equity Tier 1 ratio was at 13.6% while the leverage ratio was at 7.0%.
Net profit for the first half rose 23% to a record $2.89 billion. The performance was underpinned by a 13% increase in total income to $6.56 billion. Return on equity was 12.5%. Including one-time items, net profit was $1.33 billion for the second quarter and $2.85 billion for the first half.
The board declared a first-half dividend of 60 cents per share, compared to 33 cents per share a year ago.
In its outlook, CEO Piyush Gupta said while there are gathering clouds, the region’s prospects remain intact, enabling DBS to continue capturing growth opportunities and generating stronger shareholder returns in the coming quarters.
Year to date, shares in DBS are up 7% to $26.94.
