DBS CEO Piyush Gupta Announces Record Profit and Outlook for First Quarter

DBS Group Holdings, the largest bank in Southeast Asia, exceeded expectations with record quarterly profits thanks to better loan margins.

The bank said Monday that first-quarter net profit rose 9 percent year-over-year to a record $ 1.65 billion ($ 1.21 billion). Refinitiv, which compiles badysts' forecasts, projected a decline in net income from January to March over the previous year.

This improvement is attributable to the increase in net interest margin, a measure of loan profitability, which reached 1.88% in the first quarter, compared to 1.83% a year earlier. This offset the weakness in wealth management fees, brokerage and investment banking, the bank said.

DBS Group General Manager, Piyush Gupta, said the lines of credit could further increase, although the US Federal Reserve has indicated that it will not raise interest rates this year.

The impact of previous Fed rate hikes "has not fully reflected on our portfolio," Gupta told CNBC's Tanvir Gill Monday after the release of its results.

He added that about 40% of his loan portfolio would be revalued only to reflect these higher interest rates in the second or third year following the real increases in the United States.

"This will come to fruition at the end of this year," said Gupta, adding that on average, the net interest margin for the year would be 5 to 6 basis points higher than in 2018 .

Interest rates in Singapore are influenced by the evolution of world markets rather than by the national monetary policy defined according to the exchange rate of the local currency. The trajectory of interest rates in the United States has a significant influence on Singapore's rates.

DBS is the first of three listed lenders in Singapore to announce its first quarter results. Oversea-Chinese Banking Corp and United Overseas Bank are expected to do so on May 10 and 3, respectively.

DBS shares jumped 2.81% in afternoon trading in Asia, while OCBC and UOB rose 2.2% and 1.5%, respectively. The three banks are heavyweights in the Straits Times benchmark, which soared about 1%.