SINGAPORE: DBS has had a strong start to its earnings for 2024, as its fee income received a boost from stronger market sentiment and higher spending on credit cards.

Net profit for the first quarter rose 15% to a new high of S$2.95bil, up from S$2.57bil a year ago, it said. Return on equity also reached a new record of 19.4%.

The earnings of Singapore and South-east Asia’s largest bank blew past the S$2.48bil forecast by analysts in a Refinitiv poll.

The board has declared an interim dividend of 54% per share, with additional shares arising from its recent bonus issue also qualifying for the dividend. In February, it had proposed one bonus share for every 10 shares held.

DBS chief executive Piyush Gupta said that the lender had broad-based business momentum as loans grew, and both fee income and treasury customer sales reached new highs.

“While geopolitical tensions persist, macroeconomic conditions remain resilient and our franchise is well positioned to capture business opportunities.

“We are optimistic that total income and earnings will be better than previously guided and we will be able to deliver another year of strong shareholder returns,” he said.

DBS’ quarterly fee income crossed S$1bil for the first time, rising 23% from a year ago. The growth was led by a 47% increase in wealth management fees from stronger market sentiment and an increase in assets under management.

Card fees rose 33% from higher spending, while loan-related fees grew 30%. The consolidation of Citi Taiwan also gave a boost to wealth management and card fees; DBS had completed the acquisition of the business in August 2023.

Meanwhile, the bank’s net interest income for its commercial book rose 8% to S$3.65bil. The commercial book’s net interest margin (NIM), an important measure of profitability, rose eight basis points to 2.77% due to higher interest rates, while overall NIM was stable at 2.14%.

This came even as the industry has seen NIMs tapering off in recent quarters, with funding costs catching up. Interest rates are also expected to soften in 2024 as the US Federal Reserve sets its sights on eventual reductions in borrowing costs.

DBS’ loan growth was also better than in recent quarters, posting a 1% quarter-on-quarter increase, driven by non-trade corporate loans.

In remarks posted on May 2, Gupta said that earnings in 2024 are expected to be above 2023 levels, and group net interest income will be “modestly better”.

However, he said that non-interest income growth will likely be in the “mid-to-high teens per cent”. The bank previously forecast “double-digit” fee income growth.

When it came to asset quality, non-performing assets rose 3% from the fourth quarter to S$5.22bil, while the non-performing loan ratio was unchanged at 1.1%.

“New non-performing asset formation was partially offset by repayments and write-offs. Specific allowances were 19% lower at S$113mil or 10 basis points of loans,” said DBS. The bank set aside general allowances of S$22mil for potential bad loans.

 - ANN