DBS flags heightened uncertainty, Q2 profit beats forecasts

SINGAPORE — Singapore's biggest bank, DBS Group flagged more uncertainty ahead but said net profit growth for 2024 was expected to be in the mid-to-high single digits after posting on Wednesday (Aug 7) a second-quarter net profit that beat estimates.

DBS' results rounded up a strong second-quarter earnings season for Singapore banks, as more inflows and trading by wealthy clients ahead of anticipated rate cuts boost their wealth businesses.

"While recent market volatility and ongoing geopolitical tensions have resulted in heightened uncertainty, we have built resilience against the risks of an economic slowdown and lower interest rates," DBS CEO Piyush Gupta said in a statement.

Gupta maintained most of the outlook guidance for this year, saying group net interest income growth was expected to be in the mid-single digits this year, while commercial book non-interest income growth was seen in the mid-to-high teens.

Total income growth is anticipated to be a high-single digit, cost-income ratio to be around 40 per cent and specific allowance at 10 to 15 basis points, lower than the 17 to 20 basis point projected in May, according to his presentation slides.

Singapore has benefited from strong inflows of wealth into Asia due to its political stability, low taxes and policies favourable towards family offices and trusts.

That showed up in DBS' result, with a 24 per cent rise in wealth asset under management (AUM) to record S$396 billion. The wealth management segment income rose 19.6 per cent to S$1.29 billion in the quarter.

Both smaller peers Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB) also posted double-digit growth in wealth management income.

OCBC's wealth AUM hit a record level of S$279 billion, while UOB's jumped 10 per cent to S$182 billion.

DBS, also Southeast Asia's biggest bank by assets, said April-June net profit climbed four per cent to S$2.80 billion from S$2.69 billion a year earlier, boosted by stronger total income, with fee income at a record high.

This beat the mean estimate of S$2.71 billion from five analysts, according to LSEG data.

DBS declared a dividend of 54 cents per share for the second quarter, versus 48 cents the same quarter a year ago.

Return on equity declined to 18.2 per cent in the second quarter from 19.2 per cent in the same period of 2023.

DBS's net interest margin, a key profitability gauge, dropped to 2.14 per cent during the quarter from 2.16 per cent a year earlier.

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