$DBS GROUP HOLDINGS LTD(D05.SI)$ DBS Q2 net profit up 37%! Declare S$0.33 quaterly dividend! Beat estimate earning!???

DBS's net profit for its second quarter rose 37 per cent as it joined its peers in posting a smaller allowance from the year-ago period, it said on Thursday.

It declared a quarterly dividend of S$0.33 per share, restoring dividend payout to its pre-pandemic level. This brings its first-half dividend payout to S$0.51 per share. DBS suspended its scrip dividend scheme.

Net profit for the three months ended June 30, 2021, stood at S$1.70 billion, compared with S$1.25 billion from the year-ago period.

The earnings beat the S$1.47 billion consensus forecast in a Bloomberg survey of five analysts.

Net interest income was 9 per cent lower than a year ago, as a 17 basis points fall in net interest margin (NIM) more than offset broad-based loan growth. NIM stood at 1.45 per cent, while loan growth stood at 6 per cent.

 Compared to a year ago, fee income grew 27 per cent to S$868 million as all activities increased by double-digit percentages.

The growth was led by a 31 per cent rise in wealth management fees, a more than doubling in investment banking fees and a 26 per cent increase in card fees as financial market activity and consumer spending recovered from the trough a year ago.

Other non-interest income was S$632 million, 15 per cent lower than a year ago, and 20 per cent below the previous quarter. The declines were due to lower trading income in comparison to the two strongest trading quarters on record and to higher investment gains a year ago.

Its profit before allowances was 9 per cent lower than a year ago, as higher business volumes were more than offset by a lower NIM and a decline in investment gains.

Allowances stood at S$79 million, down 91 per cent from the year-ago period. This included a general provision writeback of S$85 million - a lower general provision writeback compared with that of the last quarter of S$190 million.

Its non-performing loan ratio stood at 1.5 per cent, unchanged over both the quarter and the year-ago period.

In a statement, DBS CEO Piyush Gupta said: “Business momentum and asset quality have both been better than expected as the economic recovery from the pandemic takes hold. While risks remain, our pipeline remains healthy and we expect business momentum to be sustained in the coming quarters.”

The Monetary Authority of Singapore (MAS) in late July lifted its dividend cap on locally-incorporated banks and finance companies based in Singapore.

In July and August last year, MAS had called on local banks and finance companies to respectively cap their total dividends per share (DPS) for FY2020 at 60 per cent of FY2019's DPS, and offer shareholders the option of receiving the remaining dividends to be paid for FY2020 in shares in lieu of cash.

With DBS closing the results season, all three Singapore banks have restored their dividend payouts to pre-pandemic levels. Analysts have expected the banks - which are highly capitalised - to be able to normalise their payouts, following the lift in dividend cap by the regulator.