Singapore’s DBS Group saw a 48% jump in its second-quarter profit following higher interest rates, which drove income growth and growth in its net interest margin (NIM).
NIM, a key indicator of profitability, had improved on the back of unexpected US interest rate increases in the second half and a rise in the Hong Kong Interbank Offered Rate, the bank detailed in its results announcement on 3 August.
Fee income grew 7%, the first year-on-year increase in six quarters, led by wealth management and cards, while treasury customer sales and other income rose 21%.
In line with this, the bank’s commercial book total income grew 42% to S$9.54bn ($7.12bn) in the first half of the year, while consumer banking/wealth management income increased 48% to S$4.27bn from higher deposit and wealth management product sales income. Institutional banking income rose 38% to S$4.69bn. The growth was led by a trebling in cash management income from higher interest rates.
DBS said April-June net profit hit a quarterly record high of S$2.69bn from S$1.82bn a year earlier.
This exceeded the average estimate of S$2.41bn from four analysts surveyed by Refinitiv.
DBS’ NIM rose for six consecutive quarters to 2.16% during the quarter from 1.58% a year earlier.
Looking at the results, DBS Group CEO Piyush Gupta said, “We achieved another set of record results as second-quarter and first-half earnings reached new highs with return on equity at 19%. The commercial book benefited from higher interest rates and broad-based growth in non-interest income activities, which was moderated by higher funding costs for treasury markets.
“During the quarter, we commenced work to strengthen the resilience of our technology while awaiting completion of the independent review into the recent digital disruptions.
“While there is some macroeconomic uncertainty, our prospects for the rest of the year are anchored on a franchise with a proven ability to capture business opportunities. Our longstanding prudence in building general allowance reserves and maintaining strong capital ratios will position us well to withstand headwinds,” he said.
