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SINGAPORE (Nikkei Markets) – Despite a marked slowdown in the Singaporean economy and the emergence of digital competitors, DBS Group Holdings, the largest lender in Southeast Asia, said it was confident that to prospects, even if it exceeded expectations with its quarterly results.
"I do not think the rest of the year will be as bad as the second quarter," said CEO Piyush Gupta at a results briefing. He cited signs of a recovery in the global economy towards the end of June following the G-20 meeting in Japan, when the United States and China agreed to a sort of truce. in their ongoing trade war.
While economic uncertainties and geopolitical tensions have increased globally, Asia would continue to grow, he added.
"A slow Asia remains a positive Asia … If the economy grows from 4.5% to 5%, you should expect a global growth of the financial system," he said.
Earlier in the day, the bank, the first of the top three lenders to announce its results in Singapore, recorded a 17% increase in net income in the second quarter, to 1.6 billion Singapore dollars (1.17 billion of dollars). hit a record. The results were better than the consensus estimate of 1.47 billion Singaporean dollars in a Refinitiv poll.
For the first six months of this year, the bank's net profit rose 12% to a record $ 3.25 billion.
DBS has maintained its forecast for loans to increase this year by an average percentage to one figure and that income increases by a high figure.
The bank's results come from increasingly dark local data. Singapore's economy grew only 0.1% in the second quarter compared to the previous year, its slowest pace since the end of the global financial crisis, the manufacturing sector, and exports. being heavily contracted. Financial services continued to be one of the best performers in the economy, but the landscape could change as a result of the central bank's decision to issue up to five new digital banking licenses.
Referring to the challenges digital competitors might face, Gupta said Singapore's banks have invested heavily in technology over the last three to four years, and that consumers in the city-state are benefiting. wide range of online services, such as instant payments, transfers and even card payments. and loan applications.
While acting from Hong Kong, Gupta said that DBS had not encountered any significant flow of funds from the former British territory, despite the many protests of the past two months.
DBS, whose largest shareholder is the Singaporean state investor, Temasek, is widely present in Singapore and Hong Kong and is active in several other markets, including China, India and India. # 39; Indonesia. DBS Private Bank, which provides wealth management services to wealthy Asia, is one of the largest in the region.
Although there have been more investigations into the transfer of funds from Hong Kong to Singapore, such flows could not take place, Gupta said.
"Hong Kong has a very credible financial system, so if that happens, it will be a slow operation," he added.
Regarding DBS 'digital banking units in India and Indonesia, Gupta said the revenue was in line with the forecast, although operations could continue to lose money for another two to three years.
In a previous statement accompanying its results, DBS said net interest income, which excludes interest paid on deposits, increased by 9 percent over the previous year to reach 2.43 billion Singapore dollars, while loans increased by 5% in constant currency. Net interest margin improved six basis points to 1.91%.
Compared to the previous quarter, the net interest margin increased by three basis points.
However, this margin could be reduced in the second half of this year, in line with expectations of two Federal Reserve reductions in its key rate, Gupta said.
Net fee income rose 9 percent year-on-year to a record $ 767 million, DBS said.
Investment banking expenses increased 44%, driven by higher debt and equity market revenues, while trading revenues increased 57% over the weak performance of the Canadian investment banking industry. last year. Investment securities gains increased fourfold from a low base to S $ 131 million.
– Kevin Lim
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