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SINGAPORE (Reuters) -DBS Group flagged strong business momentum after its profit rose to a record last year, cementing a recovery for Southeast Asia’s largest lender as pandemic-hit economies rebound and boost loan growth and asset quality.
Singapore lenders are also expected to be big beneficiaries of rising interest rates, while the city-state’s economy is forecast to grow 3% to 5% this year after expanding at its fastest annual pace in over a decade in 2021.
“We look forward to the coming year with a prudently managed balance sheet that is poised to benefit from rising interest rates,” DBS CEO Piyush Gupta said in a statement on Monday, adding that the bank expects mid-to-single digit loan growth or better this year, after reporting a 9% increase last year.
DBS, the first Singapore bank to report this season, said net profit for October-December rose to S$1.39 billion ($1.03 billion) and follows a particularly weak pandemic-hit year when profit tumbled to a three-year low in the fourth quarter.
The result however missed an average estimate of S$1.47 billion from four analysts polled by Refinitiv, and was also 18% lower than the third quarter, hit by a 41% drop in non-interest income.
DBS, which earns most of its profit from Singapore and Hong Kong, struck a deal last month to pay S$956 million to buy Citigroup’s consumer business in Taiwan, as it shores up regional acquisitions to power growth.
The Singapore lender’s full-year profit rose 44% to a record S$6.8 billion as a 9% growth in loans, the highest in seven years, and a surge in wealth management and transaction banking services fees offset the impact of lower interest rates.
Allowances for loan losses decreased to S$33 million in the latest quarter from S$577 million a year earlier.
Buoyed by the improved outlook for banks, investors have pushed up Singapore bank stocks this year, with DBS and smaller rival UOB trading at record highs.
($1 = 1.3464 Singapore dollars)
Reporting by Anshuman Daga; Editing by Diane Craft and Stephen Coates
