Singapore's largest bank, DBS Group, reported a record 48% jump in its April-June quarterly profit to S$2.69 billion, beating analyst estimates. The strong results were driven by higher interest rates and increased fee income.
DBS shares rose 0.5% amid a slightly lower broader market on the back of the earnings beat and positive earnings outlook.
The bank said the outlook for its net interest margin, a key indicator of profitability, has improved due to unexpected U.S. interest rate increases in the second half of 2022 and an increase in the Hong Kong Interbank Offered Rate. DBS expects continued support from loan books that have yet to reprice at the higher rates as well as lower deposit repricing pressure.
DBS joins peers United Overseas Bank and Oversea-Chinese Banking Corp in benefitting from higher interest rates and strong inflow of wealth from Asia due to Singapore's status as a financial safe-haven amid global uncertainty.
DBS CEO Piyush Gupta said the bank thinks "we will have a record year" and noted that interest rate hikes and the bank's digitization focus were paying off.
The bank expects its return on equity, a profitability ratio, to exceed 17% for the full year 2022, which would also be a record. DBS credited strong income growth, lower allowance for credit losses and cost discipline for its robust performance.
