DBS' net profit up 1% to US$860m in Q1

Net fee income increased 16% to US$476m.

According to a release by DBS Group, net profit for first-quarter 2017 rose to a record SGD 1.21 billion (US$860m), up 1% from a year ago. Business momentum remained healthy with fee income climbing to a record. Productivity gains resulted in 1% reduction in expenses and a one percentage point improvement in the cost-income ratio compared to a year ago. Specific allowances eased from recent quarters as non-performing loan formation moderated. Allowance coverage of non-performing assets was at 103%.

Including one-time items, net profit was SGD 1.25 billion. As previously announced, there was a gain of SGD 350 million from the divestment of PWC Building in Singapore. The amount was set aside as general allowances, raising general allowance reserves to SGD 3.49 billion. In addition, SGD 10 million of integration costs for the retail and wealth management business acquired from ANZ was accrued. The general allowance and integration cost charges had a tax impact of SGD 45 million.

Here's more from DBS:

Net profit 1% higher than a year ago

Net interest income was unchanged from a year ago at SGD 1.83 billion. The impact of softer Singapore-dollar interest rates was offset by higher loan volumes, which rose 7% in constant-currency terms to SGD 298 billion from growth in corporate, trade and Singapore housing loans.

Net fee income rose 16% to SGD 665 million. The growth was led by a 26% increase in wealth management fees to a quarterly high of SGD 222 million from stronger sales of unit trusts and other investment products. Transaction service fees increased 11% to SGD 157 million due to higher trade finance and cash management income. Investment banking fees doubled to SGD 45 million from increased equity and fixed income fees. Cards and loan-related fees were also higher.

Other non-interest income fell 15% or SGD 68 million to SGD 390 million due to lower trading gains and a non-recurring net gain of SGD 38 million a year ago. Income from treasury customer sales was little changed at SGD 304 million with an increase in wealth management treasury sales offset by a decline in corporate treasury sales.

By business unit, income for Consumer Banking / Wealth Management rose 13% to SGD 1.16 billion. The increase was across all product segments and led by double-digit percentage growth in investment products. Institutional Banking income was stable at SGD 1.32 billion as higher transaction service income was offset by lower treasury customer income. Treasury Markets income fell 39% to SGD 187 million.

Total income rose 1% to SGD 2.89 billion. Expenses declined 1% to SGD 1.25 billion as productivity gains arising from concerted digitalisation and cost management efforts enabled the bank to support higher business volumes with fewer resources. The positive jaw resulted in a one percentage point improvement in the cost-income ratio to 43% and contributed to a 2% increase in profit before allowances to SGD 1.64 billion.