Record quarterly profit for DBS, OCBC

DBS and OCBC post quarterly earnings that beat market forecasts as loans increase

PUBLISHED : Wednesday, 30 April, 2014, 10:06am
UPDATED : Thursday, 01 May, 2014, 12:36am

DBS and Oversea-Chinese Banking Corp, Singapore's two biggest banks, reported record quarterly profit and beat market estimates, powered by double-digit percentage growth in loans and improving interest rate margins.

The better-than-expected results came despite a slowdown in Singapore's housing market that most analysts have said will begin to hurt bank earnings in the second half of this year.

Both banks saw an improvement in interest rate margins, which helped boost their net interest income to record levels.

DBS' core net profit rose to a record S$1.03 billion (HK$6.36 billion) for the first three months of this year, up from S$950 million in the same period last year and above an average forecast of S$857 million from six analysts polled.

Chief executive Piyush Gupta said the bank's strong balance sheet meant it was well positioned to benefit from a rise in interest rates, which analysts say is inevitable as the US Federal Reserve unwinds its massive stimulus.

Net profit, including special items, climbed 30 per cent to a record S$1.23 billion, boosted by items such as a one-off gain from the sale of a stake in a Philippine lender.

OCBC earned a record S$899 million in net profit for the quarter, up from S$696 million in the same period a year earlier, and above an average forecast of S$727 million from four analysts.

In an effort to tap new areas of growth, the two banks have announced acquisitions in the past few months.

DBS is buying the Asian unit of Societe Generale's private bank, while OCBC is paying US$5 billion for Wing Hang Bank, one of Hong Kong's last remaining family-controlled banks, giving it a gateway to mainland China.