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DBS Group First-Quarter Profit Climbs 52% on Loans, Fees

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April 29 (Bloomberg) -- DBS Group Holdings Ltd., Southeast Asia’s biggest bank, reported a 52 percent increase in first-quarter profit as loans grew and it boosted investment banking and wealth management fees.

Net income rose to S$807 million ($657 million) from S$532 million a year earlier, the Singapore-based lender said in a statement on its website today. Profit beat the S$755.3 million average of four analysts’ estimates compiled by Bloomberg.

DBS and local rivals Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. are expanding their loan books as Singapore’s economy grew at more than twice the pace economists estimated in the first quarter. Chief Executive Officer Piyush Gupta plans to add more branches in China and India, and build businesses that cater to wealthy individuals as Asia’s economies outpace the rest of the world.

“DBS will share in a strong systemic loan growth because the economy has been doing well,” Leng Seng Choon, a Singapore-based analyst at DMG & Partners Securities Pte, said before the report. “Piyush has been growing the loans book and he has expansion plans for the longer term, which is a positive.”

Interest Income

DBS shares slipped 0.1 percent to S$14.90 at 9:51 a.m. local time. Singapore’s Straits Times Index fell 0.2 percent.

Net interest income, the difference between what a bank makes from lending and what it pays on deposits, grew 5 percent from a year earlier to S$1.12 billion, the statement showed. DBS increased loans by 18 percent to S$157.5 billion, focusing on companies in Singapore, Hong Kong and elsewhere in Asia, it said.

The net interest margin, a measure of loan profitability, fell to 1.8 percent in the first quarter from 1.93 percent a year earlier as borrowing costs remained low, the bank said.

Non-interest income rose 22 percent to S$787 million, as fees from investment banking, wealth management and trading increased. DBS was among banks that managed the $5.5 billion initial public offering of Hutchison Port Holdings Trust last month, the biggest IPO in Southeast Asia.

“While the global economy remains fraught with uncertainty, and the interest-rate climate continues to provide headwinds, we believe that efforts to strengthen our franchise in Asia will continue to bear fruit,” Gupta said in the statement.

The bank said this month it plans to open at least eight branches in China this year and double its workforce to cut its reliance on Singapore. DBS, which employs more than 1,000 people in China, plans to have 50 branches and sub-branches in the country by 2013.

United Overseas reports its results on May 6 and Oversea-Chinese on May 12.

To contact the reporter on this story: Joyce Koh in Singapore at jkoh38@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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