DBS has enjoyed robust business momentum after profits rose to record levels last year, underpinning a recovery at Southeast Asia’s largest lender as virus-hit economies rebounded and boosted loan growth and asset quality.

Banks in Singapore are also expected to be the main beneficiaries of higher interest rates, while Singapore’s economy is expected to grow 3% to 5% this year after growing at its fastest annual rate in more than a decade in 2021.

Jefferies analyst Krishna Guha said that while the bank’s fourth-quarter profit was slightly below expectations due to lower-than-expected non-interest income, growth in other revenue metrics was “remarkable.”

“Guidance for 2022 is consistent with our current inputs, with the exception of credit costs, and is likely to be the next driver of a positive earnings revision,” Guha said in a note.

DBS, the first Singaporean bank to report this quarter, said net profit rose to S$1.39 billion ($1.03 billion) in the October-December period after falling to three 30 percent in the fourth quarter of the year. Year lows, especially weak due to the impact of the epidemic.

However, the result was below the S$1.47 billion average estimate of four analysts polled by Refinitiv and 18% lower than the third quarter, with non-interest income down 41%. DBS shares were down 0.6% in early trade on Monday.

“We look forward to having a prudently managed balance sheet in the coming year, which is expected to benefit from higher interest rates,” DBS chief executive Piyush Gupta said in a statement, adding that the bank expects loans to be in the mid- to mid-teens digit or better growth. After reporting a 9% increase last year.

Singapore and Hong Kong-based DBS Bank, which made most of the profits, last month agreed to buy Citigroup’s consumer business in Taiwan for S$956 million, bolstering regional acquisitions to fuel growth.

The Singapore bank’s full-year profit rose 44% to a record S$6.8 billion as loans rose 9% to the highest level in seven years, while soaring fees for wealth management and transaction banking services offset lower interest rates.

Loan loss provisions fell to S$33 million in the latest quarter from S$577 million a year earlier.

Investors have pushed Singapore bank shares higher this year, with DBS Bank and smaller rival UOB trading near record highs, encouraged by the improving outlook for banks.

Complete News Source : Business Standard