Singapore banks post lower profits in weak markets, but top estimates

A brand of DBS financial institution is seen in Taipei, Taiwan, January 28, 2022. REUTERS/Ann Wang

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SINGAPORE, April 29 (Reuters) – Singapore lenders DBS Group (DBSM.SI) and OCBC (OCBC.SI) each reported 10% declines in quarterly earnings, which nonetheless topped analysts’ estimates after file outcomes a 12 months in the past, however their wealth administration companies suffered in weaker markets.

“The market may even look forward for indicators, and see the beginnings of advantages on margin uplift, and respectable mortgage development of 8-9%,” Kevin Kwek, a senior analyst at Sanford C. Bernstein, mentioned on Friday.

Buoyed by the better-than-expected outcomes, DBS shares rose 3.4% whereas OCBC jumped 3.6% in a broader market (.STI) that was up 1%.

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Singapore banks face a troublesome comparability after notching up bumper earnings a 12 months earlier once they benefited from a robust restoration from pandemic-hit markets.

“Geopolitical developments in latest weeks have created macroeconomic headwinds and monetary market volatility,” DBS Chief Govt Piyush Gupta, mentioned in a press release on Friday.

“Whereas some actions corresponding to wealth administration can be affected, our total enterprise pipeline continues to be wholesome,” he mentioned, including that DBS would profit considerably from rate of interest will increase within the coming quarters.

Web revenue at Southeast Asia’s largest financial institution fell to S$1.8 billion ($1.30 billion) in January-March from a file S$2 billion a 12 months earlier however got here in above a mean estimate of S$1.63 billion from six analysts, in response to Refinitiv information.

Second-ranked OCBC posted a first-quarter revenue of S$1.36 billion, down from S$1.5 billion a 12 months earlier, however this additionally got here above a mean estimate of S$1.2 billion from six analysts, in response to Refinitiv information.

OCBC counts Singapore, Higher China and Malaysia, amongst its key markets, whereas DBS earns most of its revenue from Singapore and Hong Kong.

Singapore’s economic system, which is benefiting from political uncertainty and pandemic pains elsewhere in Asia, is ready to broaden 3% to five% this 12 months.

On Friday, Singapore’s United Abroad Financial institution (UOBH.SI) additionally reported a ten% fall in web revenue to S$906 million versus common market estimate of S$1 billion.

Earlier this 12 months, DBS and UOB individually snapped up retail property bought by Citibank (C.N) in Southeast Asian markets and Taiwan, because the lenders broaden regionally.

($1 = 1.3868 Singapore {dollars})

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Reporting by Anshuman Daga; Modifying by Muralikumar Anantharaman, Sam Holmes & Shri Navaratnam

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