Singapore’s DBS reports first-quarter earnings as coronavirus hits

Southeast Asia’s largest bank, DBS, on Thursday said it set aside 1.09 billion Singapore dollars ($772.5 million) to cover potential losses from the coronavirus pandemic — which resulted in a 29{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} year-over-year fall in net profit in the first quarter. 

The Singaporean bank’s net profit fell to 1.17 billion Singapore dollars ($829.2 million) in January-March this year, down from 1.65 billion Singapore dollars ($1.17 billion) in the same period last year.

DBS said two-thirds of the money it set aside — around 703 million Singapore dollars ($498.2 million) — were for “general allowances to anticipate a deeper and more prolonged economic impact from the pandemic.” The remaining amount of 383 million Singapore dollars ($271.4 million) was mainly “for new exposures recognised as non-performing during the quarter.”

The bank didn’t specify any names, but it was reportedly among the 23 lenders that Singaporean oil trader Hin Leong owed money to. Various media and analyst reports put DBS’ exposure to Hin Leong at around $290 million.

Here are the other financial metrics from DBS that investors were looking out for: 

• Total income was up by 13{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} year-over-year to 4.03 billion Singapore dollars ($2.86 billion)
• Net interest margin, a measure of lending profitability, was at 1.86{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} — 2 basis points lower than the first quarter of last year 
• Non-performing loans inched up slightly to 1.6{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of total outstanding loans from 1.5{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the first quarter of 2019
• DBS board declared an interim 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 release their first-quarter earnings next Wednesday and Friday, respectively. 

The banks’ earnings reports come as the outlook for Singapore’s economy dims following lockdown measures domestically and overseas to contain the virus outbreak. All that has brought much of global economic activity to a standstill.

As of Wednesday, DBS shares on the Singapore Exchange have lost around 26{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} since the start of the year.  

Official preliminary estimates showed that Singapore’s economy contracted by 2.2{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the first quarter — and economists predict that the following three months will likely be worse.