SINGAPORE (Reuters) – Singapore’s DBS Group Holdings (DBSM.SI) reported a 22% fall in second-quarter net profit on Thursday after shoring up loan loss allowances in a pandemic-hit market, but its profit came just above market estimates and rose from the preceding quarter.

Piyush Gupta, CEO of Southeast Asia’s biggest lender, said in a statement that the operating trends were in line with the bank’s guidance and several fee income streams were improving from troughs in April as economies emerge from lockdowns.

Smaller rival United Overseas Bank (UOBH.SI) however missed analysts’ estimates with a 40% fall in quarterly profit due to lower margins and higher credit costs.

Investors are keen to see if the June quarter marked the trough for banks’ net interest margins, a key measure of profitability, and whether lenders can effectively tackle loan losses in recession-hit economies.

DBS said profit for the June quarter fell to S$1.25 billion ($913 million) from S$1.6 billion a year earlier, and versus an average estimate of S$1.19 billion from five analysts, according to Refinitiv data.

The profit was above the first-quarter’s S$1.16 billion number. Loan loss allowances also declined quarter on quarter.

“DBS did better with help on treasury income and surprisingly was again able to contain costs like Q1,” said Kevin Kwek, a senior analyst at Sanford C. Bernstein.

He said given the circumstances, DBS’ ability to maintain a 10% return on equity would be seen positively especially in light of the recent stock price drop due to a cap on dividends.

Investor disenchantment with lenders grew after the city-state’s central bank capped their dividends last week, sparking a sell-off in shares.

DBS’ net interest margin fell to 1.62% in the second quarter from 1.91% a year earlier.

Reporting by Anshuman Daga; Editing by Muralikumar Anantharaman & Shri Navaratnam

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

U.S. Congress presses bank regulators on coronavirus assistance, oversight

WASHINGTON (Reuters) – Lawmakers pressed U.S. regulators on Tuesday on their efforts to help struggling consumers, oversight of massive federal bailout packages and regulatory easing as they appeared before Congress for the first time since the novel coronavirus outbreak. With…

Wirecard collapse puts German watchdog in EU crosshairs

BRUSSELS/LONDON (Reuters) – The European Commission in a rare move has asked its markets watchdog to investigate German financial regulator BaFin over the collapse of payments company Wirecard . The company’s implosion on Thursday owing creditors almost $4 billion is…

Presidents of Russia, Belarus discuss oil price dispute

MOSCOW — The presidents of Russia and Belarus discussed their continuing oil price dispute Friday that disrupted steady supplies of oil from Russia to its neighboring ex-Soviet state. Russia halted oil supplies to Belarus earlier this year amid disagreement over…

HSBC first-quarter profit slides 48% on coronavirus crisis, misses forecasts

HONG KONG/LONDON (Reuters) – HSBC Holdings PLC’s (HSBA.L) first-quarter profit tumbled a worse-than-expected 48% after boosting provisions against bad loans as the coronavirus pandemic hits borrowers worldwide. Europe’s biggest bank by assets said profit before tax came in at $3.21…