SINGAPORE - DBS Group Holdings posted on Monday (Feb 14) a better-than-expected increase in fourth-quarter earnings on the back of higher loan growth and fee income.

 

Its results were partially offset by declines in the bank' s net interest margin - a key gauge of lenders' profitability - and investment gains.

 

Net profit rose 37 per cent to $1.39 billion, topping the $1.36 billion forecast by analysts in a Bloomberg poll.

 

DBS has declared a dividend of 36 cents per share for the fourth quarter, up from 33 cents in the third quarter and 18 cents a year ago - when dividend payouts from local banks and finance companies were capped at 60 per cent of the previous year' s dividend due to the Covid-19 pandemic.

 

" Barring unforeseen circumstances, the annualised dividend will rise to $1.44 per share, an increase of 9 per cent," said DBS.

 

Net interest income at Singapore' s largest bank stood at $2.14 billion in the fourth quarter, up 1 per cent from a year ago.

 

DBS said net interest income was fuelled by loan growth of 9 per cent - the highest in seven years - which mitigated the impact of interest rate cuts.

 

The bank' s net interest margin fell six basis points to 1.43 per cent, amid central banks' interest rate cuts in 2020 in response to the pandemic.

 

Net fee income rose 9 per cent to $815 million amid broad-based growth led by wealth management and transaction services.

 

Other non-interest income fell 15 per cent from a year ago to $338 million due to lower trading income and gains from investment securities.

 

Meanwhile, expenses of $1.67 billion were 6 per cent higher than a year ago mainly due to government grants in the previous year.

 

Total allowances - set aside for bad loans - stood at $33 million, compared with $577 million a year ago, signalling improved asset quality.

 

DBS' fourth-quarter profit was 18 per cent lower than the previous quarter, reflecting seasonally lower non-interest income and a smaller general allowance write-back.

 

However, earnings for the full year surged 44 per cent to hit a record $6.8 billion.

 

The lender said this restores " a trend of consecutively higher earnings that the pandemic disrupted in the previous year" .

 

DBS chief Piyush Gupta said the robust growth in DBS' loan book and higher fee income speak to a recovering economic environment and the bank' s broadly diversified franchise.

 

" I am pleased that we have managed expenses and credit costs well through this period. Equally important, we have made significant investments in our future by expanding our footprint in India, Taiwan and the Greater Bay Area and building new digital platforms to give us additional engines."

 

The bank announced last month that it will acquire Citi' s Taiwan consumer business at a premium of $956 million, making it Taiwan' s largest foreign bank by assets.

 

It also completed its 5.29 billion yuan (S$1.1 billion) acquisition of a 13 per cent stake in privately owned Shenzhen Rural Commercial Bank in October.

 

It completed its takeover of Lakshmi Vilas Bank in India in November 2020, adding 550 branches and more than 900 ATMs to its network in the country.

 

DBS' results on Monday kick off earnings season for local lenders. UOB is expected to report its earnings on Wednesday, and OCBC on Feb 23.