DBS net profit drops 9 per cent in Q4 as bad loans grow

DBS Group saw net profit drop markedly in the quarter ended December as bad loans increased and net interest margin shrank for the Singaporean banking and financial services company.

Net profit fell 9 per cent year on year during the fourth quarter to S$913m even as total income rose 5 per cent to S$2.78bn on growth in non-interest income, particularly from DBS’s wealth management and card segments.

But net interest income fell 2 per cent to S$1.82bn as declining net interest margins more than offset a 6 per cent expansion in loans.

The non-performing loan rate at DBS also rose to 1.4 per cent in the fourth quarter, up from 0.9 per cent a year prior and exceeding that of OCBC, which earlier this week reported its own NPL rate had jumped to 1.3 per cent.

That pushed allowances to nearly double from a year prior in the final quarter, reaching S$462m. As with OCBC, a major driver of the increase was stress in the oil and gas support services sector.

For all of 2016 net profit at DBS fell 2 per cent to S$4.24bn, while income rose 6 per cent to S$11.5bn.