Singapore Banks Post Lower Profits In Weak Markets, But Top Estimates

Singapore lenders DBS Group and OCBC both reported 10% declines in quarterly profits, which still topped analysts' estimates after record results a year ago, but their wealth management businesses suffered in weaker markets.

"The market will also look ahead for signs, and see the beginnings of benefits on margin uplift, and decent loan growth of 8-9%," Kevin Kwek, a senior analyst at Sanford C. Bernstein, said on Friday.

Buoyed by the better-than-expected results, DBS shares rose 3.4% while OCBC jumped 3.6% in a broader market that was up 1%.

Singapore banks face a tough comparison after notching up bumper profits a year earlier when they benefited from a strong recovery from pandemic-hit markets.

"Geopolitical developments in recent weeks have created macroeconomic headwinds and financial market volatility," DBS Chief Executive Piyush Gupta, said in a statement on Friday.

"While some activities such as wealth management will be affected, our overall business pipeline continues to be healthy," he said, adding that DBS would benefit significantly from interest rate increases in the coming quarters.

Net profit at Southeast Asia's biggest bank fell to S$1.8 billion ($1.30 billion) in January-March from a record S$2 billion a year earlier but came in above an average estimate of S$1.63 billion from six analysts, according to Refinitiv data.

Second-ranked OCBC posted a first-quarter profit of S$1.36 billion, down from S$1.5 billion a year earlier, but this also came above an average estimate of S$1.2 billion from six analysts, according to Refinitiv data.

OCBC counts Singapore, Greater China and Malaysia, among its key markets, while DBS earns most of its profit from Singapore and Hong Kong.

Singapore's economy, which is benefiting from political uncertainty and pandemic pains elsewhere in Asia, is set to expand 3% to 5% this year.

On Friday, Singapore's United Overseas Bank also reported a 10% fall in net profit to S$906 million versus average market estimate of S$1 billion.

Earlier this year, DBS and UOB separately snapped up retail assets sold by Citibank in Southeast Asian markets and Taiwan, as the lenders expand regionally.

($1 = 1.3868 Singapore dollars)