An improved credit environment coupled with lower allowances enabled DBS to post a surge in third quarter profits.
DBS registered a 31 percent year-on-year increase in net profit to S$1.7 billion ($1.26 billion) for the third quarter, according to its latest results.
Not unlike its peers, this was driven primarily by a significant improvement in allowances for credit and other losses – minus S$70 million compared to S$554 million booked in the same period last year.
Excluding the allowances, the bank posted S$1.893 billion in profits, a 7 percent year-on-year decrease.
Flat Revenues
Although DBS saw loans grow 2 percent and fee income reach the second-highest level on record, a 10 percent drop in other non-interest income led total income to stay flat (minus 1 percent) at S$3.561 billion.
Expenses also climbed 8 percent higher to S$1.668 billion.
Positive Outlook
Although the DBS' profits were in part affected by lower net interest income, the bank expects a change in the rates environment to support upcoming improvements to the bottom line.
«A progressive normalization of interest rates in the coming quarters will be beneficial to earnings,» said DBS chief executive Piyush Gupta.
«Asset quality continues to be resilient and total allowances are likely to remain low. These positives will offset expected cost pressures as the economic recovery takes hold.»
