* DBS Q1 core net profit S$1.03 bln vs average f'cast S$857
* OCBC Q1 net profit S$899 mln vs average forecast S$727 mln
* UOB Q1 net profit S$788 mln vs average forecast S$740 mln
* DBS shares hit three-month high, OCBC, UOB also gain
(Adds UOB's result, share price milestone for DBS)
By Saeed Azhar and Anshuman Daga
SINGAPORE, April 30 Singapore's three listed
banks led by DBS Group Holdings reported record
first-quarter profit that topped market forecasts, powered by
double-digit loan growth and improved margins.
The results also showed the asset quality of DBS,
Oversea-Chinese Banking Corp and United Overseas Bank
has not been affected by deteriorating bad debt
problems in China and came despite slower growth in Singapore's
DBS's Hong Kong unit is the city's sixth-biggest bank by
assets while OCBC's China exposure is set to grow after it
agreed to acquire mid-sized Wing Hang Bank Ltd for $5 billion
Quarterly core net profit for DBS rose 9 percent to S$1.03
billion ($823 million) over the same period a year earlier. It
was also 20 percent higher than an average forecast from six
analysts polled by Reuters which called for a profit decline.
DBS said its interest rate margin - the difference between
interest paid on deposits and charged on loans - rose to 1.66
percent, the highest in six quarters.
"There was no stress on (DBS') China trade book, one of the
key reasons for the stock's year-to-date weakness," Harsh
Wardhan Modi, analyst at JPMorgan wrote in a note after the
results, adding that the bank's ability to manage risk had
improved significantly under its current leadership team.
DBS shares rose as much as 2.7 percent after the results
reaching S$17.31, the highest in more than three months. They
closed 0.6 percent higher in line with the broader market, and
the shares are now down 0.9 percent year-to-date.
Shares of OCBC rose as much as 3.2 percent to a high of
S$9.77, the highest since April 9. The stock has underperformed
this year because of concern about its acquisition of Hong
Kong's Wing Hang. UOB also rose as much as 3.4 percent.
Bad loans at China banks rose for a ninth straight quarter
as of December to the highest level since 2008 as the economy
slows after blistering growth over the past decade. But DBS
Chief Executive Piyush Gupta told a news briefing he was quite
comfortable with the quality of the bank's book in China.
"We really have no exposure to any shadow banking. We have
no exposure to any trusts. We have no exposure to any companies
which are heavily indebted to shadow banking or to the trusts
business," he said at a news briefing.
OCBC Chief Executive Samuel Tsien said the bank is selective
in choosing companies and sectors in China and so far has not
seen any impact on its business. Its non-performing loan ratio
in China is only 0.3 percent, lower than that of entire group's
0.7 percent as at March 31, he added.
RECORD NET INTEREST INCOME
All three banks saw improvement in interest rate margins
from a year earlier helping them post record net interest
CIMB banking analyst Kenneth Ng said Singapore's banks
certainly look like a clear sector to be overweight in a rising
rate environment as the U.S. Federal Reserve unwinds its massive
Net profit for DBS including special items, climbed 30
percent to a record S$1.23 billion, boosted by a one-off gain
from the sale of a stake in a Philippine lender.
Net profit for OCBC jumped 29 percent to a record S$899
million for the quarter, above an average forecast of S$727
million from four analysts.
UOB said net profit for January-March reached S$788 million
from S$722 million in the same period a year earlier.
The housing market, however, remains a key concern for
Singapore's banks after loans to the sector slowed to a growth
rate of 7.9 percent in March from a year earlier. That compares
with a compound annual growth rate of 15 percent in the past
Gupta said new housing loan applications at the bank were
down 45 percent in the first quarter from a year earlier, but he
expects housing loans will still grow this year albeit at a
(Additional reporting by Andrew Toh and Eveline Danubrata;
Editing by Edwina Gibbs)