DBS gives upbeat outlook on strong recovery, lower credit costs By Reuters

By Anshuman Daga

SINGAPORE (Reuters) – Singapore’s DBS Group (OTC:) Holdings flagged strong loan growth and weaker credit costs after reporting a 37% jump in quarterly net profit, as Southeast Asia’s largest lender benefited from a rebound in its mainstay home market.

The bank joined local peers OCBC and United Overseas Bank (OTC:) in beating market estimates but the sector’s sequential performance slowed sharply, underscoring challenges to maintain growth.

Global banks HSBC and Standard Chartered (OTC:) have also reduced credit losses in a global economic recovery after booking huge provisions last year in the face of the coronavirus pandemic.

“Business momentum and asset quality have both been better than expected as the economic recovery from the pandemic takes hold,” DBS CEO Piyush Gupta said in a statement.

“While risks remain, our pipeline remains healthy and we expect business momentum to be sustained in the coming quarters.”

DBS reported profit for April-June increased to S$1.7 billion from S$1.25 billion a year earlier. That compared with an average estimate of S$1.42 billion from five analysts, according to Refinitiv data. Profit fell 15% from a record first quarter.

The bank’s provisions for potential loan losses declined to S$79 million from S$849 million a year earlier.

DBS increased its dividend payout after Singapore’s central bank last week removed caps on dividends paid by banks, citing the improving global economic outlook.

As Singapore’s economy rebounds from its worst-ever recession, demand for home mortgages and loans has improved, while booming markets have bolstered banks’ wealth management businesses. This has helped cushion the impact of weak net interest margins in a low interest rate environment.

DBS raised its full-year loan growth expectation to high single digit from mid-to-high single digit and Gupta said the bank’s asset quality was better than expected.