Record breaker: DBS posts stellar $2b profits in Q2

It climbed 9% from last year.

DBS Group delivered record net profit of SGD 2.00 billion for the first six months of 2014, up 9% from a year ago, crossing the SGD 2 billion mark for the first time. Including one-time items, net profit was SGD 2.20 billion.

According to DBS, the performance was underpinned by a 3% increase in total income to SGD 4.76 billion as higher net interest margin, loan volumes and annuity fee income streams more than offset a decline in market-related income.

“Allowance charges were lower, declining 40% to SGD 279 million, as the non-performing loan rate improved to 0.9% and the allowance coverage of non-performing assets increased to 162%. For the second quarter, net profit rose 9% from a year ago to SGD 969 million,” noted DBS.

Here’s more:
First-half net interest income increased 12% to SGD 3.05 billion as loan and deposit volumes grew and net interest margin improved three basis points to 1.66%.

Loans rose 10% to SGD 257 billion from regional corporate borrowing and secured consumer loans.

Net fee income rose 3% to SGD 1.01 billion with increased contributions from annuity activities. Wealth management fees rose 19% to a new high of $255 million, while card and loan-related fees also increased.

These increases were partially offset by lower brokerage commissions and investment banking fees. Other non-interest income fell 24% to SGD 706 million due mainly to lower net trading income.

Total income rose 3% to SGD 4.76 billion. By business segment, Consumer Banking/Wealth Management (CBG) increased 10% to SGD 1.38 billion and Institutional Banking (IBG) grew 5% to SGD 2.49 billion.

The increase in both businesses’ incomes was broad-based across products and included an 8% increase in income from treasury customer flows to SGD 627 million. Treasury segment income declined 15% to SGD 516 million. CBG and IBG accounted for a combined 81% of total income from 78% a year ago.

Expenses increased 8% to SGD 2.10 billion from higher staff and operating costs. The cost-income ratio was 44%.
Total allowances declined 40% to SGD 279 million. Specific allowances fell 20% to SGD 195 million or 14 basis points of loans due partly to non-performing loan resolutions. General allowances of SGD 84 million were taken in tandem with loan growth and were 62% lower.

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