- DBS Group Holdings said net profit nearly doubled from the previous quarter and reached a historic high of 2.01 billion Singapore dollars ($1.52 billion) in the January to March period, thanks to accelerating business momentum.
- "Asset quality was healthy, with new non-performing asset formation and specific allowances at pre-pandemic levels," DBS said in its earnings release.
- CEO Piyush Gupta said he's "quite optimistic" about the economic outlook for the region.
SINGAPORE — Singapore's largest bank DBS reported Friday that net profit soared 72% from a year ago to an all-time high in the first quarter of 2021.
DBS Group Holdings said net profit nearly doubled from the previous quarter and reached a historic high of 2.01 billion Singapore dollars ($1.52 billion) in the January to March period, thanks to accelerating business momentum.
CEO Piyush Gupta said he's "quite optimistic" about the economic outlook for the region.
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In North Asia and Southeast Asia, the bank is seeing a "fairly strong resurgence" in activity, he told CNBC's "Capital Connection" after the results were announced. "We don't think the central banks are going to tighten anytime soon, and people are just itching to get out and start economic activity again."
"Obviously you've got to keep (a) watchful eye on the pandemic, India might see a little bit of a dial back," he also pointed out.
DBS said in its earnings release that loans grew 3% and deposits rose 2% from the previous quarter. "Asset quality was healthy, with new non-performing asset formation and specific allowances at pre-pandemic levels," the bank said.
That allowed DBS to release 190 million Singapore dollars that was previously set aside for bad loans.
In a statement released by the bank, Gupta said: "This has been an extraordinary quarter for our business as we fired on all cylinders. Loan and deposit growth were robust, fees were strong and treasury had a record performance."
Shares of the bank rose more than 2% in Asia, and hit a 52-week high of 30.12 Singapore dollars.
DBS earnings breakdown
Here are the other financial metrics that investors looked for:
- Total income fell by 4% year-over-year to 3.85 billion Singapore dollars ($2.9 billion)
- Net interest margin, a key gauge of lending profitability, was at 1.49% — 37 basis points lower than the first quarter of 2020, due to global interest rate cuts
- Non-performing loans fell to 1.5% of total outstanding loans from 1.6% in the first quarter of last year
Tighter margins were partially offset by loan growth, but net interest income in the first quarter fell 15% year-on-year to 2.1 billion Singapore dollars.
"While net interest income is a bit softer because of lower rates, what's quite good is wealth management and all the lines of fee income are doing quite well," said Harsh Modi, JPMorgan's co-head for financials research in Asia excluding Japan.
He said there are multiple drivers, including from card fees and trading.
"As we look at (the) next 12 to 18 months, some of these trends for the entire sector should continue to move in the right direction," he told CNBC's "Street Signs Asia" on Friday.
Future interest rate hikes
There will be "some degree of slowdown" when interest rates rise, Gupta said, but that could be years away.
Most members of the U.S. Federal Open Market Committee expect to keep rates near zero through 2023.
"While I think some of the Asian central banks might have to start hiking sooner if inflationary pressures come through, by and large, Asian rates tend to follow the Fed direction," the CEO said.
"I don't think you will see a massive increase in rates, I really don't expect to see a large taper tantrum issue in the rest of this year either," he said, referring a wave of sell-offs when U.S. Treasury yields surged in 2013 as a result of the Fed's announcement it was going to wind down its asset purchases.