• DBS Group Holdings, the largest bank in Singapore and Southeast Asia, said its net profit for the second quarter jumped 37% from a year ago to 1.7 billion Singapore dollars ($1.26 billion).
• That beat an average forecast of 1.42 billion Singapore dollars, according to analyst estimates on Refinitiv.
• A day before DBS released second-quarter earnings, its smaller Singaporean peers — Oversea-Chinese Banking Corp and United Overseas Bank — reported financial results that beat estimates.

SINGAPORE — DBS Group Holdings, the largest bank in Singapore and Southeast Asia, reported on Thursday second-quarter earnings that beat expectations as the economic recovery in its home market takes hold.

The bank's net profit for the April-to-June quarter jumped 37% from a year ago to 1.7 billion Singapore dollars ($1.26 billion). That beat an average forecast of 1.42 billion Singapore dollars, according to analyst estimates on Refinitiv.

But compared with the previous quarter, net profit was 15% lower.

DBS shares in Singapore rose around 0.7% on Thursday.

Piyush Gupta, chief executive of DBS, said better-than-expected performance in all business segments helped to offset headwinds from lower interest rates. He said the bank saw improvements in its loans business, as well as fee income from investment banking and wealth management.

"It was a case of everything else kicking in very solidly, offsetting the headwinds from the interest rate," Gupta told CNBC's "Capital Connection."

"Quite clearly, the zero interest rate environment takes its toll. And for a bank like us which is very long on current account and savings account deposits ... that headwind is quite significant," he added.

DBS announced a dividend of 33 Singapore cents per share for the second quarter. That's an increase from 18 Singapore cents per share in the previous quarter after the Monetary Authority of Singapore lifted a cap on dividend payments.

Here are the other highlights from the earnings report:

• The bank's provisions for potential loan losses fell to 79 million Singapore dollars in the second quarter, compared with 849 million Singapore dollars a year ago.
• Net interest margin, a measure of lending profitability, was 1.45% in the second quarter. That's lower than 1.62% a year ago.
• Customer loans rose to around 397 billion Singapore dollars in the first six months of 2021, 6% higher than the same period last year.

Prospects of Singapore banks

The release of DBS' second-quarter earnings wrapped up the financial reporting season for Singapore-listed banks.

On Wednesday, two smaller Singapore banks — Oversea-Chinese Banking Corp and United Overseas Bank — reported financial results that beat estimates.

OCBC, Singapore's second-largest bank, reported a 59% year-on-year increase in net profit to 1.16 billion Singapore dollars in the second quarter. UOB's net profit for the period was around 1 billion Singapore dollars, 43% higher than a year ago.

Prospects of the Singapore banking trio have improved this year as the economic recovery boosted demand for loans, while an upswing in financial markets earlier this year helped their wealth management businesses.

But worsening Covid-19 outbreaks in parts of Asia could hit consumers, said the DBS CEO.

"I do think that there will be more stress in the consumer portfolio, that's where the increasing pandemic might have some impact than SMEs," Gupta said, referring to small- and medium-sized enterprises.