DBS Group’s profit up 32% to a record high
DBS Group said quarterly profit jumped 32% to a record high and its outlook was upgraded on Thursday as higher interest rates boosted net interest margins at Southeast Asia's biggest lender.
Banks around the world have benefited from a surge in net interest income as central banks raise interest rates to combat rising inflation, but analysts warn banks could suffer if higher interest rates lead to a sharp slowdown in economic activity.
Local peer UOB Group beat market forecasts last week with a record quarterly net profit as net interest income rose and loan provisions fell. OCBC will release results on Friday.
Singapore-based DBS's net profit came in at S$2.24 billion ($1.58 billion) in the July-September period, beating four analysts' average estimate of S$1.97 billion, Refinitiv data showed.
DBS CEO Piyush Gupta said in a statement that the bank maintained business momentum this quarter and asset quality was resilient. Looking ahead to next year, he said the credit pipeline remains healthy and could achieve mid-single-digit growth.
While the bank's net fee and commission income fell 13% this quarter, largely due to weakness in its asset management business, Gupta forecasts double-digit fee income growth next year, led by asset management and credit cards.
DBS's return on equity rose to a record high of 16.3% this quarter, while net interest income rose 44%. Net interest margin, a key profitability indicator, rose to 1.90% this quarter from 1.43% a year earlier.
Shares of Singapore banks have risen between 4%-6% so far this year on expectations of a big widening in net interest margins, outperforming the broader market.
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