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The logo of DBS, the largest bank in Singapore.
Roslan Rahman | AFP | fake pictures
Southeast Asia’s largest bank, DBS, said Thursday that it set aside Singapore $ 1.09 billion ($ 772.5 million) to cover potential losses from the coronavirus pandemic, resulting in an annual 29% drop in net earnings in the first quarter.
The Singaporean bank’s net profit fell to 1.17 trillion Singapore dollars ($ 829.2 million) in January-March this year, down from 1.65 trillion Singapore dollars ($ 1.17 trillion) in the same period last year.
DBS said two-thirds of the money it spent, about S $ 703 million ($ 498.2 million), was for “general appropriations to anticipate a deeper and longer-lasting economic impact of the pandemic.” The remaining amount of S $ 383 million ($ 271.4 million) was primarily “for new exposures recognized as unprofitable during the quarter”.
The bank did not specify any names, but reportedly among the 23 lenders, Singapore oil trader Hin Leong owed him money. Various media and analyst reports put DBS’s exposure to Hin Leong at around $ 290 million.
These are the other DBS financial metrics investors were looking for:
- Total revenue increased 13% year-over-year to 4.03 billion Singapore dollars ($ 2.86 billion)
- Net interest margin, a measure of credit performance, stood at 1.86%, 2 basis points below the first quarter of last year.
- Non-performing loans increased slightly to 1.6% of total outstanding loans from 1.5% in the first quarter of 2019
- DBS’s board declared a provisional dividend of 33 Singapore cents ($ 0.23) per share
DBS kicks off earnings reporting season for Singapore-listed banks. Its smaller peers United Overseas Bank and Oversea-Chinese Banking Corp will post their first quarter earnings next Wednesday and Friday, respectively.
The banks’ earnings reports come as the outlook for the Singapore economy dims after shutdown measures at home and abroad to contain the virus outbreak. All of this has halted much of the world’s economic activity.
As of Wednesday, DBS shares on the Singapore Stock Exchange have lost around 26% since the start of the year.
Preliminary official estimates showed Singapore’s economy contracted 2.2% in the first quarter, and economists predict that the next three months will likely be worse.
