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DBS predicts stable loans growth for the year

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DBS Group Holdings forecast stable loans growth for this year after a robust increase in net interest margin drove an 8 per cent rise in quarterly profit and a record annual profit.

After three years of strong loans growth, Singapore's banks face tougher times as the Republic's export-reliant economy slows, partly due to a trade war between China and the US.

Data released yesterday showed Singapore's exports fell 10.1 per cent in January from a year earlier, the biggest drop in over two years.

DBS forecasts mid-single-digit loans growth and high single-digit income growth for this year. Loans grew 6 per cent in constant currency terms to $345 billion last year.

It reported a net profit of $1.32 billion for October-December versus $1.22 billion a year earlier, in line with an average estimate of $1.34 billion from three analysts, according to data from Refinitiv.

Full-year profit jumped 28 per cent to a record $5.63 billion as local banks benefited from higher interest rates.

"We believe the result reads well for peers, for which street expectations are a lot lower," Jefferies analyst Krishna Guha said in a report, referring to the quarterly numbers.

DBS kicked off the reporting season for local banks, with smaller peers OCBC Bank and United Overseas Bank reporting their results on Friday.

Its chief executive Piyush Gupta said in a statement that DBS' return on equity of 12.1 per cent for last year was near its historical high of 2007, when interest rates were twice current levels and capital requirements were less stringent.

Its shares climbed 1.7 per cent yesterday morning, outperforming the broader market, which was up 0.9 per cent. - REUTERS