SINGAPORE: Singapore’s largest bank has reported a 1% rise in net profit for the second quarter of this year, lifted by strong wealth fees and trading income.

DBS Group Holding’s net profit for the three months to June 30 was S$2.82bil, up from S$2.8bil in the year-ago period, beating the S$2.79bil forecast by analysts in a Bloomberg poll.

Yesterday, the bank declared an interim dividend of 60 Singapore cents a share and a capital return dividend of 15 Singapore cents a share. The dividend payout is estimated to be about S$2.13bil.

This brings the quarter’s total dividend payout to 75 cents a share, up from the 54 cents in the year-ago period.

DBS chief executive officer Tan Su Shan said in a statement: “While external uncertainties remain, we have opportunities ahead of us. Our proactive management of the balance sheet puts us in a good position to navigate the interest rate cycle, while strong capital and liquidity ensure we are well placed to support customers.”

Commercial book net interest income fell 4% to S$3.63bil. This came as its net interest margin declined 28 basis points to 2.55% from 2.83% a year earlier as interest rates trended lower.

But net fee and commission income grew 11% to S$1.17bil from S$1.05bil a year earlier, led by the wealth management segment.

The wealth management segment saw fees surge to S$649mil in the quarter, up from S$518mil a year earlier, driven by broad-based growth in investment products and bancassurance.

Treasury customer sales and other income increased 9% to S$522mil from S$478mil a year ago.

Markets trading income soared 124% to S$418mil from S$187mil a year ago, thanks to lower funding costs and a more conducive trading environment.

Return on equity fell to 16.7% in the second quarter from 18.2% in the same period a year ago.

Singapore’s largest bank by assets said that the impact of lower interest rates was mitigated by balance sheet hedging and partly offset by strong deposit growth, which funded loans and an increased deployment into liquid assets.

Customer deposits grew 4% to nearly S$574mil in the quarter from S$551mil a year ago.

Surplus deposits were deployed into liquid assets and this was accretive to net interest income and return on equity but modestly reduced its net interest margin, said DBS.

Loans were up 2% to S$433mil, led by non-trade corporate loans from broad-based growth across industries.

DBS maintained its targets for this year, which include group net interest income to come in at slightly above levels last year, commercial book non-interest income growth to be in the mid to high single digits, and net profit to be below last year’s levels.

The bank’s first-half net profit fell 1% to S$5.72bil from S$5.76bil a year ago.

Net interest income in the first half fell 1% to S$7.34bil from S$7.42bil, weighed by lower interest rates.

Net fee and commission income, a key component of a bank’s non-interest income, was up 17% to S$2.44bil from S$2.09bil. — The Straits Times/ANN