Final hours! Save up to 55% OFF InvestingProCLAIM SALE

Singapore's DBS second-quarter profit beats estimates as business picks up

Published 08/05/2020, 08:57 PM
Updated 08/05/2020, 09:00 PM
© Reuters.
DBSM
-
UOBH
-
DBSDY
-

By Anshuman Daga

SINGAPORE (Reuters) - Singapore's DBS Group (OTC:DBSDY) Holdings (SI:DBSM) reported a 22% fall in second-quarter net profit on Thursday after shoring up loan loss allowances in a pandemic-hit market, but its profit came just above market estimates and rose from the preceding quarter.

Piyush Gupta, CEO of Southeast Asia's biggest lender, said in a statement that the operating trends were in line with the bank's guidance and several fee income streams were improving from troughs in April as economies emerge from lockdowns.

Smaller rival United Overseas Bank (SI:UOBH) however missed analysts' estimates with a 40% fall in quarterly profit due to lower margins and higher credit costs.

Investors are keen to see if the June quarter marked the trough for banks' net interest margins, a key measure of profitability, and whether lenders can effectively tackle loan losses in recession-hit economies.

DBS said profit for the June quarter fell to S$1.25 billion ($913 million) from S$1.6 billion a year earlier, and versus an average estimate of S$1.19 billion from five analysts, according to Refinitiv data.

The profit was above the first-quarter's S$1.16 billion number. Loan loss allowances also declined quarter on quarter.

"DBS did better with help on treasury income and surprisingly was again able to contain costs like Q1," said Kevin Kwek, a senior analyst at Sanford C. Bernstein.

He said given the circumstances, DBS' ability to maintain a 10% return on equity would be seen positively especially in light of the recent stock price drop due to a cap on dividends.

Investor disenchantment with lenders grew after the city-state's central bank capped their dividends last week, sparking a sell-off in shares.

© Reuters. FILE PHOTO: DBS signages are seen in Singapore

DBS' net interest margin fell to 1.62% in the second quarter from 1.91% a year earlier.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.