Singapore’s DBS reports record profits in a decade
2023.02.13 03:57
Singapore’s DBS reports record profits in a decade
By Ray Johnson
Budrigannews.com – As Southeast Asia’s largest bank by assets reported record quarterly and full-year profits, DBS Group’s chief executive stated that the company expects interest rates to moderate. DBS Group’s net interest margins reached highs for a decade as a result of rising interest rates.
As global peers, Singapore lenders are benefiting from higher interest rates; however, analysts stated that rising bank profits may be curtailed as the cycle peaks and economic growth slows.
DBS CEO Piyush Gupta stated at a news conference on Monday that although he does not anticipate any rate cuts this year, U.S. interest rate increases are likely to moderate.
Due to factors such as outflows to treasury bills and a strengthening Singapore dollar, Gupta stated that the group’s peak net interest margin guidance of 2.25 percent posed a downside risk of 5 to 7 basis points.
Nevertheless, he stated that asset quality was robust and that the business pipeline remained robust. No one could have predicted how quickly China opened up. From there, you’ll see some tailwinds,” Gupta said.
DBS maintained its full-year outlook for loan growth in the middle single digits and reported a stronger-than-anticipated 68% increase in quarterly profit.
A special dividend of 50 Singapore cents per share was announced by the lender, which derives most of its revenue from Singapore and Hong Kong. DBS last distributed a special divided in 2017.
Refinitiv data indicate that DBS, the first Singapore bank to report this season, reported a record S$2.34 billion ($1.76 billion) in October-December net profit, exceeding three analysts’ average estimates of S$2.16 billion.
However, in a weaker overall market on Monday, DBS shares fell 1.6%.
“The underlying results are mixed, with better credit costs compensating for a lower-than-anticipated pre-provision operating profit. According to a note from Jefferies analysts, “refreshed guidance (is) unlikely to drive further upside in forward earnings.”
In the most recent quarter, DBS reported a total net interest margin of 2.05%, up from 1.43 percent in the previous year’s comparable period.
Because they benefited from an early recovery in the city-state’s pandemic-ravaged economy last year, Singapore banks, which are among the most well-capitalized in the world, are on track to report record full-year results.
DBS made a record-breaking annual profit of S$8.2 billion, up 20%. Smaller rivals OCBC and UOB are expected to report results next week. Annual profits are expected to rise sharply, but quarter-over-quarter earnings are expected to be flat or slightly lower.
Since the end of October, when Singapore’s key market index fell to 20-month lows, the banks’ shares have increased by 8% to 16%. Since then, the gauge has increased by 12%.
According to Gupta, DBS owes India’s Adani Group of Companies S$1.3 billion, of which S$1 billion was used to finance Adani’s $10.5 billion acquisition of Holcim (SIX:). last year’s cement business in India.
In a report published on January 24, the short-seller Hindenburg Research, based in New York, accused the Adani Group of stock manipulation and improper use of offshore tax havens, both of which it claimed obscured the extent to which the Adani family owned stock in group companies.
Since its denial of any wrongdoing, the conglomerate’s seven listed businesses have lost $110 billion.
Gupta said, referring to the cement industry, “They’re solid cash generating companies, so we’re not concerned about the exposure.” “The base is restricted.”
