Singapore’s DBS claims fall in Q4 net profit

Market - Mohit Shah - Feb 16,2017

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singapores dbs claims fall in q4 net profit

On Thursday, Singapore’s top lender DBS Group reported that its fourth-quarter net profit dropped after it set aside 87 percent extra money to manage bad loans.

DBS blamed the offshore support services companies which were responsible for the bad loans. It is still expected that the troubles might persist further this year.

The bank's fourth-quarter net profit recorded for 2016 fell sharply by 9 percent from the year-earlier period to S$913 million ($644 million). Moreover, it set aside S$462 million ($326 million) in necessities for the quarter, up from S$247 million ($174 million) a year ago.

On Thursday morning, DBS shares opened 0.4 percent higher after a decline period of three consecutive days. On the other hand, rival firms like United Overseas Bank (UOB) and Oversea-Chinese Banking Corp (OCBC), opened 0.1 percent higher.

The oil prices need to be strengthened in order to ease burdens on offshore oil and gas support services firms, according to the CEO’s of OCBC and DBS.

On Wednesday, S&P Global Ratings mentioned in a statement that fragile domestic economic growth, global trade worries, and a slowing China are likely to enhance the woes of Singapore banks.

In the fourth-quarter, the net interest income for DBS fell 2 percent to S$1.82 billion ($1.3 billion) since the net interest margin dropped 13 basis points to 1.71 percent. Moreover, non-interest income spiked 19 percent to S$952 million ($671 million).

The primary effect due to the stresses in the oil and gas support services sector was evident through the non-performing loan rate which surged to 1.4 percent, higher from 0.9 percent in the year-earlier quarter.

DBS is the second among the Singapore-listed banks to reveal its fourth quarter earnings. On Tuesday, OCBC announced that net profit after tax in the fourth quarter depreciated 18 percent on-year to S$789 million ($556 million).