By Yantultra Ngoy
SINGAPORE (Reuters) – Singapore's largest bank DBS Group (OTC:) on Thursday reported first-quarter results that beat expectations with broad-based growth, and said it expects net profit to surpass last year's record result.
Due to strong business momentum with loans growing and fee income and treasury client sales reaching new highs, net profit jumped 15% year-on-year to S$2.96 billion ($2.2 billion), compared to market expectations of a 3.5% decline.
DBS shares rose 3% in morning trading.
Guidance that net profit will grow this year was more optimistic than in the previous quarter when DBS only said it expected net interest income for the year to be around 2023 levels. Last year, DBS reported record profits of S$10.3 billion.
“While geopolitical tensions persist, macroeconomic conditions remain resilient and our franchise is well positioned to seize business opportunities,” Piyush Gupta, CEO of DBS, said in a statement.
He added: “We are optimistic that overall income and earnings will be better than previous guidance and that we will be able to deliver another year of strong returns for shareholders.”
Singapore has benefited from strong inflows of wealth from Asia, including China, as well as Europe and the Americas, attracted by the political stability the city-state has experienced in recent years.
Quarterly results showed that return on shares reached a record level of 19.4%, compared to 18.6% a year ago. Net interest margin, a key measure of profitability, rose to 2.14% from 2.12% a year earlier.
The bank pumped up its dividend in the first quarter, giving 54 Singapore cents per share compared to 42 cents in the same quarter last year.
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DBS also expects overall income growth to be 1 to 2 percentage points above previous guidance of “mid-single digits,” according to slides accompanying the results.
“DBS results delivered a positive surprise, with earnings coming in above estimates which helped allay initial concerns that earnings momentum may slow going forward,” Yip Jun Rong, market strategist at IG, said in a note to clients.
“Asset quality remains good and investors can look forward to higher dividends. It is difficult to find fault with the last set of numbers,” he said.
On Tuesday, Singapore's central bank ended DBS's six-month moratorium on acquiring new business or making unnecessary IT changes after DBS addressed issues related to frequent and prolonged disruptions to its digital banking services last year.
Singapore rivals United Overseas Bank (OTC:) and China Offshore Banking Corporation will report their results next week.
($1 = 1.3600 Singapore dollars)