DBS beats expectations with earnings growth of 9% on higher credit income

DBS Group earnings exceeded expectations in the first quarter of 2019, driven by growth in credit income offsetting lower commissions and fees.

The Singapore-based bank recorded a 9% rise in net profit to 1.65 billion Swedish dollars ($ 1.21 billion) in the first three months of the year, exceeding the average forecast by Bloomberg of $ 1.48 billion. This increase is due in part to a 5-basis-point increase in net interest margins on loans made by DBS to 1.88%, thanks to higher interest rates in Singapore and Hong Kong.

This rise in credit income could be put under pressure if central banks in the region eased their monetary policy by lowering key rates to stimulate growth, which had been contained in recent months.

Weak points include sharp declines in brokerage and investment banking products, which fell 41% and 42%, respectively.

The board also announced that dividends would be paid four times a year, up from the current two-year calendar, while maintaining its total level at $ 1.20 per share throughout the year.

"We had a good start to the year as business momentum was sustained and non-interest income recovered from recent weakness," said Piyush Gupta, CEO of DBS. "ROE's record profits and growth demonstrate the increased profitability of our franchise through digitization, shifting to higher-yielding businesses and more flexible execution. We are well positioned to continue to seize growth opportunities in the region and generate good returns for shareholders. "