SINGAPORE (Reuters) - Singapore’s DBS Group Holdings Ltd said it expects a strong performance this year, after it reported a record high net profit for the first quarter, powered by higher interest rates and loan growth in an improving economy.
The robust showing by DBS, which kicked off results for the sector, comes after the top lender and its peers OCBC and United Overseas Bank posted record profits last year on broad-based growth in businesses such as wealth management.
“It’s shaping up to what I think will be a fairly strong year for DBS,” CEO Piyush Gupta told a news conference on Monday, adding that global growth momentum was quite robust.
Expectations of strong economic growth is prompting some Asian central banks to follow in the footsteps of the U.S. Federal Reserve in gradually shifting away from extremely accommodative monetary settings.
This month, Singapore’s central bank tightened monetary policy for the first time in six years.
DBS’ net profit for the first quarter ended March came in at S$1.52 billion ($1.15 billion), versus S$1.21 billion a year earlier and an average forecast of S$1.43 billion from four estimates compiled by Thomson Reuters.
Total income rose 16 percent to S$3.36 billion.
Shares in DBS, in which Singaporean state investor Temasek Holdings owns just over 29 percent, rose 3 percent to a record after the results.
Gupta said he was confident DBS would clock in a net interest margin of at least 1.85 percent this year, up from 1.75 percent last year.
DBS improved its net interest margin by 9 basis points to 1.83 percent in the just-ended quarter from a year ago.
Loans by DBS, Southeast Asia’s largest bank by assets, expanded 13 percent in constant-currency terms to S$328 billion.
The bank’s net fee income rose 12 percent to S$744 million, with wealth management fees rising by an underlying 31 percent to S$331 million. Allowances for bad debts fell 18 percent.
($1 = 1.3241 Singapore dollars)
Reporting by Anshuman Daga; Editing by Himani Sarkar