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Nikkei Markets

DBS posts record profit, offers relief amid coronavirus outbreak

Bank sees 1-2% fall in annual revenue if disease is checked by summer

Earlier this week, DBS, which has large operations in Hong Kong and China, evacuated staff from its main Singapore office after an employee was diagnosed with the coronavirus.   © Reuters

SINGAPORE (Nikkei Markets) -- DBS Group Holdings, Southeast Asia's largest lender, reported record annual profits and said the coronavirus outbreak in China and other key markets would not make a significant dent in its performance this year.

Speaking to reporters via a webcast, CEO Piyush Gupta said revenue could fall by 1-2% this year while provisions for bad debt could rise by a few hundredths of a percentage point, assuming the virus is brought under control as temperatures rise during the summer months.

Gupta added that many of DBS's customers in the travel and hospitality industries are large companies with the ability to absorb disruptions to their businesses for three to four months. He cited Singapore Airlines and Shangri-la Group as examples.

DBS is the first of Singapore's three banks to report quarterly earnings and Gupta's comments were keenly awaited as the city-state grapples with a sharp slowdown.

The new disease, named Covid-19, has roiled Singapore's tourism-related sectors as local authorities ban visitors from China, while countries such as South Korea and Qatar advise their citizens to avoid the city-state. Earlier this week, the Singapore Tourism Board said it expects visitor arrivals to fall by 25-30% from last year's 19.1 million.

The outbreak has also disrupted business operations in other sectors as companies call off events and deal with the various restrictions imposed by health authorities in Singapore.

Earlier this week, DBS, which has large operations in Hong Kong and China, evacuated staff from its main Singapore office after an employee was diagnosed with the coronavirus. The bank also cancelled its post-results briefing at its headquarters, relying instead on its webcast.

To help smaller companies, Gupta said DBS would roll out various measures such as a six-month moratorium on principal repayment for property loans in Singapore and Hong Kong. The bank is due to provide details later.

United Overseas Bank, the smallest of the three lenders, has already announced steps such as delaying the repayment of principal and providing working capital loans to cash-strapped businesses.

Although economic activity is slowing, Gupta said momentum remained strong in areas such as wealth management and non-trade corporate loans.

For the quarter ended December, DBS earned 1.51 billion Singapore dollars ($1.1 billion,) a 14% rise from the year-ago period. Its results were slightly better than the S$1.48 billion consensus estimate from Refinitiv.

The bank's loan book grew 4% to S$358 billion during the quarter, while net interest income, which is the income earned on loans after deducting interest payments to depositors, rose 4% to S$2.43 billion.

Fee income increased 17% to S$741 million, led by a 31% increase in wealth management fees due to buoyant investor sentiment, in contrast to the equity market sell-off the year before.

For the whole of 2019, the bank's net profit increased by 14% to a record S$6.39 billion.

DBS also raised its quarterly dividend by 10% to 33 Singapore cents, with Gupta saying the move reflected the lender's confidence in continuing to deliver high quality results.

-- Kevin Lim

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