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Singapore's DBS third-quarter profit dips below estimate, loan outlook dims

Reuters  |  SINGAPORE 

By and John Geddie

(Reuters) - DBS Group Holdings Ltd, Southeast Asia's biggest lender, reported a quarterly profit slightly below estimates on Monday, flagging trade war worries and property cooling measures likely to hold back its loan book growth next year.

Concerns about the impact of an intensifying tariff dispute between and the on Singapore's export-reliant economy, and curbs on the city-state's property market, have muddied the outlook for banks after they reported record profits last year.

"There is a lot of angst and anxiety around trade war ... Our own sense is that the direct impact of the trade war on the macroeconomies will not be as material as people worry," DBS said at a briefing following the results.

"What is more worrying is the impact of market sentiment - the indirect impact of the trade war."

DBS said net profit came in at S$1.41 billion ($1 billion) in the three months ended September versus S$822 million a year earlier, and an average estimate of S$1.47 billion from three analysts, according to data from The took higher allowances for weak last year.

DBS shares fell 2.6 percent in afternoon trade, on track for their biggest single-day percentage fall in nearly three months.

DBS, which is about 29 percent-owned by Singaporean state investor Temasek Holdings, posted results after announced a record quarterly profit and reported profit rose 17 percent.

DBS's net interest margin, a key gauge of profitability, rose 13 basis points from a year ago to 1.86 percent. Total income jumped 10 percent to a record S$3.38 billion, DBS said, while net interest income rose 15 percent.

Gupta said he expected 10-11 percent growth in non-trade loans for the full year. However, next year, he forecast non-trade loans to moderate to 6-7 percent "based on an assumption that given the uncertainty - trade war etc - the amount of investment might slow down".

The had been scaling back its trade loan book due to "unattractive pricing", he added.

DBS, which has a 31 percent share of the Singaporean housing loan market, said there also had been a bigger-than-expected slowdown in new mortgages because of recent cooling measures.

Before the latest round of measures were introduced this year, DBS expected to grow its mortgage book by around S$4 billion in 2018. After the measures the lender revised that to S$3.5 billion and now expects about S$2.5 billion, Gupta said.

DBS's also were hit by trade war worries, down 66 percent year-on-year.

"The biggest impact on our business is from market sentiment ... and that shows up in our investment banking fee income," Gupta said.

($1 = 1.3737 dollars)

(Reporting by and Anshuman Daga; Editing by Stephen Coates)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, November 05 2018. 12:13 IST