DBS Group Net Profit Falls on Oil Sector Allowances

By Gaurav Raghuvanshi Features Dow Jones Newswires

DBS Group Holdings Ltd. (D05.SG) Monday reported a 25% on year fall in its third quarter net profit, mainly as the biggest bank in Singapore made allowances for its loan exposure to the oil and gas sector.

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Net profit in the July-to-September quarter was 802 million Singapore dollars (US$588 million), compared with S$1.07 billion in the same quarter of the previous year.

DBS made an allowance of S$815 million as it classified its "residual weak oil and gas support services" exposure as non-performing assets, the bank said in a regulatory filing with the Singapore Exchange. Without the allowances, profit would have risen to S$1.80 billion, which would have been its highest ever.

The group's exposure to the oil and gas support services sector amounts to S$5.3 billion, making less than 2% of its overall loan portfolio, DBS said, adding the allowance "removes uncertainty about the asset quality outlook."

The net profit was also hurt by a S$21 million one-time charge, without which net profit would have been S$822 million, DBS said.

The ratio of bad loans jumped to 1.7% in the quarter, from 1.3% in the same period of last year. Net interest margin fell to 1.73% from 1.77%.

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Still, net interest income rose 9% on year to S$1.98 billion, while fees and commissions income rose 12% to S$685 million.

"Business momentum has been strong as we continued to capture opportunities in a reflationary environment across the markets we operate in," Piyush Gupta, the bank's chief executive, said.

Write to Gaurav Raghuvanshi at gaurav.raghuvanshi@wsj.com

(END) Dow Jones Newswires

November 05, 2017 19:17 ET (00:17 GMT)