© Reuters. FILE PHOTO: A logo of DBS bank is seen in Taipei, Taiwan, January 28, 2022. REUTERS/Ann Wang/File Photo
By Yantoultra Ngui
SINGAPORE (Reuters) -Singapore’s biggest bank DBS Group (OTC:) reported on Monday a better than expected 18% jump in third-quarter net profit on the back of higher interest rates, which it forecast will also help keep its profit steady next year.
DBS, which is also Southeast Asia’s largest lender, has already forecast a record full-year profit for the current year. “Net profit (for 2024) to be maintained around record 2023 level,” CEO Piyush Gupta said in results presentation materials.
“As we enter the coming year, higher-for-longer interest rates will be a net benefit to earnings, while our solid balance sheet with ample liquidity, prudent general allowance reserves and healthy capital ratios will provide us with strong buffers against macro uncertainties,” Gupta said in a statement.
The bank’s July-September net profit rose to S$2.63 billion ($1.94 billion) from S$2.24 billion a year earlier as total income grew to a record on higher interest margins and fee income.
That beat the mean estimate of S$2.5 billion from four analysts surveyed by LSEG.
DBS’ net interest margin, a key profitability gauge, rose to 2.19% during the quarter from 1.90% in the year-ago period.
It announced a dividend of 48 Singapore cents per share for the third quarter, bringing the payout for the nine months of 2023 to S$1.38 a share.
Gupta also expected the bank’s 2024 net interest income to be around this year’s level, and fee income momentum to be sustained by wealth management and cards.
He also forecast next year’s profit before allowances to be higher, and total allowances to normalise to 17-20 basis points of loans, according to the statement.
($1 = 1.3541 Singapore dollars)