DBS Bank income up 54.5pc

DBS Bank (Hong Kong), a unit of Singapore-based DBS Group Holdings, said first-half profit jumped 54.5 per cent, fuelled by higher net interest income and a one-off gain from the sale of its Central offices.

Its net profit was $1.67 billion in the first six months, up from $1.08 billion a year ago, after booking a $267 million gain from the disposal of its premises at Queen's Road Central.

Net interest income grew by 32.7 per cent to $2.58 billion, driven by higher loan volume and wider net interest margin which was up by 53 basis points from the first half last year to 2.76 per cent.

However, net interest margin of the group's total operation in Hong Kong, including businesses outside of the banking unit, shrank by eight basis points to 2.56 per cent in the second quarter compared with the previous quarter.

Randolph Sullivan, chief executive at DBS Bank (Hong Kong), said the drop in net interest margin in the second quarter was due to a narrow spread between the prime lending rate and the Hong Kong interbank offered rate.

He expected the prime-Hibor spread to range between 3.5 per cent and 4 per cent level in the second half of the year. 'IPOs [initial public offerings], money inflow and outflow, that's a big influence on the short-term prime-Hibor spread,' Mr Sullivan said.