SINGAPORE – DBS Group Holdings had a strong start to its earnings for 2024 as its fee income received a boost from stronger market sentiment and higher spending on credit cards.

Net profit for the first quarter rose 15 per cent to a new high of $2.95 billion, up from $2.57 billion a year ago, it said on May 2.

Return on equity also hit 19.4 per cent, while total income grew 13 per cent to $5.56 billion. Both also set fresh records.

Excluding costs from the integration of Citibank Taiwan, net profit stood at $2.96 billion.

The earnings of Singapore and South-east Asia’s largest bank blew past the $2.5 billion consensus forecast by analysts in a Bloomberg poll.

The board has declared an interim dividend of 54 cents per share, with additional shares arising from its recent bonus issue also qualifying for the dividend. In February, it had proposed one bonus share for every 10 shares held.

DBS shares closed 1.86 per cent higher at $35.55 on May 2. Its market capitalisation crossed $100 billion – a first for a Singapore-listed company – as its shares touched $36 earlier in the morning amid heavy trading.

Meanwhile, peer UOB edged up 0.23 per cent to $30.47, while OCBC Bank rose 0.63 per cent to $14.34.

DBS chief executive Piyush Gupta said that the lender had broad-based business momentum as loans grew, and both fee income and treasury customer sales reached new highs.

While geopolitical tensions persist, macroeconomic conditions are resilient as growth in Asia is expected to stay stable, and factory activity and consumer demand seen to hold up, he said in a virtual media briefing.

“We are optimistic that total income and earnings will be better than previously guided, and we will be able to deliver another year of strong shareholder returns,” he said.

DBS’ quarterly fee income crossed $1 billion for the first time, rising 23 per cent from a year ago.

The growth was led by a 47 per cent increase in wealth management fees from stronger market sentiment and an increase in assets under management.

Card fees rose 33 per cent from higher spending, while loan-related fees grew 30 per cent. The consolidation of Citi Taiwan also gave a boost to wealth management and card fees; DBS had completed the acquisition of the business in August 2023.

Meanwhile, the bank’s net interest income for its commercial book rose 8 per cent to $3.65 billion.

The commercial book’s net interest margin (NIM), an important measure of profitability, rose eight basis points to 2.77 per cent due to higher interest rates.

Overall, NIM stood at 2.14 per cent, up two basis points from a year ago.

This came even as the industry has seen NIMs tapering off in recent quarters, with funding costs catching up. Interest rates are also expected to soften in 2024 as the US Federal Reserve sets its sights on eventual reductions in borrowing costs.

DBS’ loan growth was also better than in recent quarters, posting a 1 per cent quarter-on-quarter increase, driven by non-trade corporate loans.

Mr Gupta said that earnings in 2024 are expected to be above 2023 levels, and group net interest income will be “modestly better”.

The bank previously forecast that net interest income will be similar to its 2023 level.

Meanwhile, Mr Gupta said that non-interest income growth will likely be in the “mid-to-high teens per cent”, compared with “double-digit” fee income growth previously.

The momentum in the first quarter was encouraging, even when the boost from Citibank Taiwan was stripped away, he said.

For example, when it came to fees, wealth management performed especially well, growing 35 per cent from a low base a year ago, when the Credit Suisse crisis happened.

“But even if you adjust for that, and if you compare with the first quarter of the year before, for example, we still grew 20-odd per cent,” he said, adding that more deposits are being channelled to investment products as customers put their money to work and investor sentiment improves.

The bank’s first-quarter net new money of $6 billion – referring to new inflows from wealth management clients – was also similar to inflows seen in previous quarters.

Mr Gupta added: “The only question mark right now, for us, is the investment bank. This is probably one of our poorest quarters in several years... However, I don’t think it can get any worse. If anything, there’s probably some upside in that line as well.”

DBS’ first-quarter investment banking fees fell 38 per cent quarter on quarter amid slower capital market activities in the industry.

When it came to asset quality, non-performing assets rose 3 per cent from the fourth quarter to $5.22 billion, while the non-performing loan ratio was unchanged at 1.1 per cent.

“New non-performing asset formation was partially offset by repayments and write-offs. Specific allowances were 19 per cent lower at $113 million or 10 basis points of loans,” said DBS. The bank set aside general allowances of $22 million for potential bad loans.

Expenses rose 10 per cent year on year, with Citi Taiwan accounting for five percentage points of the increase, while the cost-to-income ratio was stable at 37 per cent.

Compared with the previous quarter, DBS’ earnings rose 30 per cent, up from $2.27 billion.

The lender’s results kick off the local banks’ earnings season, with UOB set to post its results on May 8 and OCBC on May 10.