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Singapore Bank DBS' Q2 Profit Above Expectations; Record Year Anticipated

Singapore Bank DBS' Q2 Profit Above Expectations; Record Year Anticipated
The largest bank in Singapore, DBS Group, reported on Thursday that higher interest rates contributed to income growth and expected rise in its net interest margin (NIM), causing its second-quarter profit to leap an expectation-beating 48% to a new record.
A hike in the Hong Kong Interbank Offered Rate and unanticipated increases in U.S. interest rates in the second half, according to DBS, have boosted the outlook for NIM, a crucial measure of profitability.
According to presentation slides that accompanied its results, it anticipated continuing support from the one-fifth of its commercial book that still needed to be repriced and less deposit repricing pressure than it had anticipated.
In early trade on Thursday, DBS shares increased 1.1% despite a somewhat flat broader market.
The smaller counterpart United Overseas Bank (UOBH.SI), whose views were followed by DBS after it reported a 27% increase in second-quarter earnings last Thursday, had a more optimistic prognosis for NIM in the wake of the most recent U.S. rate hike.
Due to the city-state's reputation as a financial haven, Singapore banks have profited from large wealth inflows during times of global uncertainty in addition to higher interest rates.
On Friday, Oversea-Chinese Banking Corp is scheduled to release its second-quarter financial results.
According to the presentations, DBS, which is also the largest lender in Southeast Asia by assets, anticipates another record year as first-half drivers continued into the second. It anticipates a full-year return on equity of over 17%.
"While there is some macroeconomic uncertainty, our prospects for the rest of the year are anchored on a franchise with a proven ability to capture business opportunities," DBS Chief Executive Officer Piyush Gupta said in a statement.
In comparison to S$1.82 billion a year earlier, DBS said that the net profit for April through June reached a quarterly record high of S$2.69 billion ($2.69 billion).
This was greater than the S$2.41 billion consensus forecast of the four analysts surveyed by Refinitiv.
For the sixth straight quarter, DBS' NIM increased to 2.16% from 1.58% a year earlier.
Return on equity increased to a new quarterly high of 19.2% from 13.4% in the corresponding period last year.
A dividend of 48 Singapore cents per share was issued.

Christopher J. Mitchell

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