DBS Group Holdings Ltd. expects net profit in 2024 to exceed last year's record figure after it reported a 15% year-over-year rise in income in the first quarter thanks to higher fee income and loan growth.
Singapore's largest lender by assets posted net profit for the three months to March 31 of S$2.96 billion, up from S$2.57 billion a year ago, DBS said in an exchange announcement on May 2. Net fee and commission income jumped to S$1.04 billion from S$851 million over the same period, while group net interest margin rose to 2.14% from 2.12%.
The results surpassed the first-quarter GAAP net income consensus mean estimate of S$2.49 billion on the S&P Capital IQ Pro platform, with four analysts reporting. The consensus mean estimate for gross margin was 2.12%.
"The result came in even better than what we thought and the beat is very much broad-based," Jefferies said in a note for clients after the results were announced.
Singapore-headquartered DBS, ranked 63rd globally by assets, has operations across Asia-Pacific, including in India, where it is the biggest foreign bank by branch network after acquiring a local lender. Like many Singaporean companies, the lender has sought growth overseas to make up for the relatively smaller home market.
Strong loan growth
Loan growth beat expectations, with increases in both Singapore and India, DBS CEO Piyush Gupta said during a press briefing after the results.
The bank's net fee income grew 23%, bolstered by a 47% increase in wealth management fees due to stronger market sentiment and an increase in assets under management, the bank said in an earnings release.
"This is obviously a very, very strong first quarter. It's exceptional by any measure. It's safe to say everything went our way," Gupta said. "We are not seeing any obvious signs of stress anywhere. We actually guided for the fact that we thought we could protect our S$10 billion net profit number and at this stage, at the end of the first quarter, I think its reasonable assumption that we should be able to beat last year's profit number."
Gupta expects the bank's net interest income to top 2023 levels and double-digit growth in noninterest income. "I think total income could be 1 or 2 percentage points higher than our previous guidance of mid-single digits."
DBS plans to improve its information technology infrastructure after the Monetary Authority of Singapore imposed a six-month pause on nonessential IT changes and prohibited new business ventures and reductions in the bank's branch and ATM networks due to repeated disruptions in 2023. The central bank on April 30 said it would not extend the six-month pause as the bank made substantive progress to address its shortcomings.
Gupta said the bank has more work to do and there are areas that are a work in progress. DBS will simplify its system architecture and build deeper engineering skills.