Singapore’s biggest banks post higher profit on interest income

Singapore banks are tapping growth in overseas markets and from fee-based businesses such as wealth management as they grapple with the lowest lending margins in Southeast Asia. — file picture
Singapore banks are tapping growth in overseas markets and from fee-based businesses such as wealth management as they grapple with the lowest lending margins in Southeast Asia. — file picture

SINGAPORE, Feb 14 —  DBS Group Holdings Ltd and Oversea-Chinese Banking Corp (OCBC), Southeast Asia’s two biggest lenders, posted an increase in fourth-quarter core profit as interest income climbed.

DBS’s net income excluding one-time gains rose 6 per cent to S$802 million (RM2,101 million)  for the quarter ended December 31, from S$760 million a year earlier, according to a statement posted on the Singapore stock exchange. Including items such as the sale of stakes in a Philippine bank, profit declined 20 per cent to S$973 million. Oversea-Chinese Banking Corp. reported an 8 per cent profit increase for the three months.

The two Singapore banks are tapping growth in overseas markets and from fee-based businesses such as wealth management as they grapple with the lowest lending margins in Southeast Asia. Lenders in the city-state expanded credit by 17 per cent last year as economic growth accelerated to 3.7 per cent, from 1.3 per cent in the previous year.

“The reason for the good results to date has been loan volume growth,” David Ross, a Bethesda, Maryland-based managing director of Chevy Chase Trust Co, which holds shares in OCBC, said before the earnings were released. An expansion in net interest margin “is what will be needed as a catalyst to start moving the stocks upward”.

Net income at OCBC climbed to S$715 million in the fourth quarter from S$663 million a year earlier, the bank said in a statement today. That beat the S$617 million average estimate of six analysts surveyed by Bloomberg. — Bloomberg

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