Southeast Asia’s largest lender DBS bank has seen a record quarterly profit at $722 million in the July to September period, up 28 percent from $563 million a year ago.
It joined rivals in beating expectations as strong trading income and decreasing bad debts helped it overcome low interest rates.
However, the pace of earnings recovery this year could be slowed by weak margins on loans at Singapore banks because of low US rates and an expected economic slowdown in the coming months.
“This year we have been able to leverage the strength of our customer franchise to expand our loan book and increase cross-sell, thus mitigating the effects of headwinds in a low rate market,” said Piyush Gupta, chief executive of DBS.
“Going forward, we will continue to focus single-mindedly on execution so as to consistently deliver quality earnings.”
DBS posted a $722 million net profit in the third quarter, a 28 percent increase from $563 million recorded a year ago, while bad debts saw a 26 percent decline to $195 million from the previous year.
DBS’ smaller competitors United Overseas Bank (UOB) and Oversea-Chinese Banking Corp (OCBC) have both posted better than expected quarterly profits.
Asian banks have enjoyed the strong economic recovery in the region, which has helped to boost loan growth and reduce bad debts.
DBS announced that loans surged 15 percent in the third quarter from 2009, faster than the 8.7 percent growth of UOB, but slower than the 29 percent expansion of OCBC.
However, net interest income slipped 5 percent to $1.08 billion as net interest margins fell by 23 basis points, compared with a 32 basis point decline for UOB and 18 basis points for OCBC.
DBS saw a 6 percent decline in fee and commission income to $340 million, while trading income increased more than twice to $235 million.