DBS quarterly results trounce forecasts, another record year expected

By Yantoultra Ngui

SINGAPORE (Reuters) -Singapore's biggest bank DBS Group reported on Thursday first-quarter results that trumped expectations with broad-based growth and said it expects net profit to exceed last year's record result.

Underpinned by robust business momentum as loans grew and both fee income and treasury customer sales reached new highs, net profit jumped 15% from the same period a year earlier to S$2.96 billion ($2.2 billion), beating market expectations for a 3.5% decline.

Shares in DBS climbed as much as 3.2% to a record S$36 in morning trade and were up 2.2% at 0424 GMT, outperforming a 0.3% rise in the benchmark index.

The jump gave DBS a market capitalization of some S$101 billion, the first Singapore-listed company to exceed the S$100 billion mark.

Guidance that net profit would grow this year was more upbeat than in the previous quarter when DBS said only that it expected this year's net interest income to be around 2023 levels. Last year, DBS reported record profit of S$10.3 billion.

"All this geopolitics is still uncertain... But the macroeconomic conditions seem to be quite resilient," DBS Chief Executive Officer Piyush Gupta told reporters and analysts after the earnings were released.

He pointed to stable growth rates in Asia, positive manufacturing indicators in most countries and solid consumer demand as reassuring signs, and said strength in the U.S. dollar "doesn't look like anything that would cause us too much worry".

Singapore has benefited from strong inflows of wealth from Asia, including China, as well as Europe and the Americas, drawn in by the city-state's political stability in recent years.

That showed up in the result, with a 45% jump in wealth management fees.

The quarterly results showed return on equity hit a record high of 19.4%, up from 18.6% a year ago. Net interest margin, a key profitability gauge, edged up to 2.14% from 2.12% a year earlier.

The bank pumped up its first-quarter dividend, giving 54 Singapore cents per share compared with 42 cents a year earlier.

DBS is also projecting total income growth to be 1 to 2 percentage points above previous guidance of "mid-single-digits" according to slides accompanying the results.

"DBS' results have delivered a positive surprise, with earnings coming in way above estimates which helped to soothe initial concerns that earnings momentum may slow ahead," Yeap Jun Rong, market strategist at IG, said in a note to clients.

"Asset quality remains healthy and investors can look forward to higher dividends. It is hard to find fault with the recent set of numbers," he said.

On Tuesday, Singapore's central bank ended DBS's six-month pause from acquiring new businesses or making non-essential IT changes after DBS addressed problems that had disrupted its digital banking services last year.

Singapore rivals United Overseas Bank and Oversea-Chinese Banking Corporation report results next week.

($1 = 1.3600 Singapore dollars)

(Reporting by Yantoultra Ngui; Additional reporting by Ankur Banerjee in Singapore; Editing by Edwina Gibbs and Sonali Paul)