- DBS net profit rises 9% to S$3.08 billion, exceeding estimates
- Total income at record, exceeds S$6 billion for first time in Q2
- Net interest margin falls 18 basis points to 1.87% in Q2
SINGAPORE, Aug 6 (Reuters) - DBS Group, Singapore's biggest bank, raised its full-year guidance after second-quarter net profit rose 9%, as it leans on its wealth management business, treasury sales and trading income to drive growth.
DBS shares rose 3% to a record high of S$75.80 on Thursday after it posted a record quarterly net profit of S$3.08 billion ($2.40 billion) that beat estimates.
"What pleased me most was the fact that we had record fees across the franchise, and it wasn't just any particular franchise. It was really a solid quarter across all the franchises," CEO Tan Su Shan told reporters.
DBS joined Asia-focused rivals HSBC and Standard Chartered in reporting robust growth in wealth management fee income, as inflows into safe-haven financial hubs like Singapore amid geopolitical uncertainty and booming regional equity markets boosted the ranks of Asia's rich.
"Wealth management is really firing on all cylinders, and we hope to continue," said Tan.
DBS raised its 2026 outlook, saying total income was expected to exceed 2025 levels, particularly as the lender expects to ride the tailwinds of Asia's wealth boom.
CGS International analysts said in a note that they see potential for further upside to DBS' full-year net profit forecast, adding that it is well positioned to benefit from a potential recovery in Singapore and Hong Kong interest rates.
DBS' results kick off the second-quarter earnings season for Singaporean banks, with investors focused on how they are managing interest-rate pressure and whether wealth, transaction-banking and markets income can offset any narrowing in margins.
Oversea-Chinese Banking Corp and United Overseas Bank are scheduled to announce results on Friday.
DBS' wealth management fees for the quarter grew 42% year-on-year to a record S$919 million from higher customer investment activity, with wealth assets under management surpassing S$500 billion for the first time.
Fees from treasury sales to wealth management and corporate customers, as well as markets trading income, notched double-digit percentage gains year-on-year to lift net fee income to S$1.46 billion, its second-highest quarterly level on record.
FORECASTING UPBEAT GROWTH
DBS said the stronger outlook reflected a record first-half performance and its ability to remain resilient and capture opportunities despite a challenging interest-rate environment.
For the rest of the year, DBS is forecasting interest rates remaining at current levels, deposit growth to be in the high-single-digit range and its cost-income ratio to remain in the low-40% range.
It expects specific provisions to be within 17 to 20 basis points of loans in the second half, while general-provision reserves provide a buffer against risks.
Net interest margin, a key gauge of profitability, fell to 1.87% from 2.05% in the same period a year earlier, but that was offset by strong loan and deposit growth.
For the second quarter, DBS announced a total dividend of 81 Singapore cents per share, up 6 Singapore cents from a year earlier. Its return on equity rose to 17.9%, up from 16.7% a year ago.
($1 = 1.2812 Singapore dollars)
Reporting by Rae Wee and Yantoultra Ngui; Editing by Nia Williams, Jamie Freed and Alexander Smith
Source: Reuters