DBS Group Net Profit Falls on Oil Sector Allowances

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.

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%.

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)