By Kevin Lim
SINGAPORE (Nov 06) -- Singapore's biggest lender DBS Group Holdings reported on Monday a 23% drop in third quarter net profit as it made hefty provisions on its exposure to the oil and gas support services industries.
DBS posted a net profit of 822 million Singapore dollars ($602 million) for the three months ended September, down from S$1.07 billion in the same period a year ago.
"Net allowances of S$815 million were taken as residual weak oil and gas support services exposures were classified as non-performing assets," DBS said in a press release. "The step removes uncertainty about the asset quality outlook."
The hefty provisions come as a surprise as smaller rivals Oversea-Chinese Banking Corp and United Overseas Bank had earlier reported double-digit increases in net profit for the quarter. OCBC, Singapore's number two lender, last month reported net profit rose 12% on-year to S$1.06 billion, while UOB said last Friday its net profit increased 12% to S$883 million.
In its earnings statement, DBS, Singapore's largest bank by assets and market capitalization, said net interest income increased 9% to S$1.98 billion as loans growth offset the drop in net interest margin to 1.73% from 1.77% in the year-ago period.
Net fee income rose 12% to S$685 million, helped by higher fees from wealth management and investment banking, but other non-interest income fell 20% to S$399 million due to lower trading income as well as the absence of one-time gains.
DBS CEO Piyush Gupta said in a statement: "The recognition of the residual weak oil and gas support service exposures as NPAs will enable investors to return their focus to our operating performance and digital agenda. Business momentum has been strong as we continued to capture opportunities in a reflationary environment across the markets we operate in."
- By Kevin Lim; Kevin.Lim@nikkeinewsrise.com; +65 6331 6250
- Edited by Sumathi Vaidyanathan
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