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DBS posts record profit on lending gains

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South-east Asia's biggest lender DBS Group Holdings beat market estimates to post a record quarterly profit, as strong lending income offset weakness in wealth management, brokerage and investment banking fees.

DBS posted an 8.5 per cent rise in first-quarter net profit from a year earlier and said the macro-economic environment had stabilised.

"I am relatively sanguine about the business momentum," its chief executive Piyush Gupta told a news conference.

DBS maintained its forecast of mid-single-digit loan growth for this year and stable net interest margins, a key gauge of profitability. The lender's shares advanced 2.8 per cent to their highest since June last year, outperforming a 0.9 per cent rise in the broader market.

"Overall, core driver was in line with expectations, we expect similar trends for peers as well," Jefferies analyst Krishna Guha said in a report.

"We were positively surprised by strength in trading gains."

United Overseas Bank will report results on Friday, followed by OCBC Bank a week later.

DBS reported a net profit of $1.65 billion for the three months to end-March, up from $1.52 billion a year earlier and an average estimate of $1.48 billion from four analysts, according to Refinitiv I/B/E/S.

After three years of strong loans growth, Singapore's banks are gearing up for tougher times as its export-reliant economy slows.

When asked about the big risks for the business for this year, Mr Gupta highlighted a steep collapse in the interest rate environment if the US Federal Reserve started to cut rates, but said he does not foresee that happening.

He, however, singled out the Singapore mortgage market as a weak spot.

"For the first time in a long, long time, we actually show a shrinkage in our mortgage loan book in the first quarter," Mr Gupta said.- REUTERS