DBS boosts allowance reserves amid uncertainties, Q1 profit beats views

SINGAPORE: Singapore’s biggest bank, DBS Group, boosted its general allowance reserves amid heightened macroeconomic and geopolitical uncertainty on Thursday (May 8) after posting a 2 per cent year-on-year drop in first-quarter net profit, which beat expectations.

“Recent escalations in trade tensions have heightened macroeconomic risks and market volatility,” DBS chief executive Tan Su Shan said in a statement. “As uncertainty persists, we will stay nimble to capture opportunities while prudently managing risks.”

DBS’s results followed those of smaller peer United Overseas Bank, which on Wednesday posted a stable yet weaker-than-expected first-quarter net profit and paused giving 2025 guidance due to uncertainties triggered by US tariffs.

Other major global lenders such as HSBC and Standard Chartered have also highlighted the threat to economic growth due to the impact of US President Donald Trump’s tariffs.

DBS, which is Southeast Asia’s biggest lender by assets, said its January to March net profit declined to S$2.9 billion (US$2.24 billion) from S$2.95 billion a year earlier, due to higher tax expenses from the implementation of the 15 per cent global minimum tax. It was the first on-year drop since the first quarter of 2022.

But the result beat the mean estimate of S$2.82 billion from two analysts, according to LSEG data.

Profit before tax hit a record of S$3.44 billion in the first quarter, slightly higher than a year ago, as total income reached a new high from robust business growth, according to the bank’s financial statement.

DBS said it took a general allowance of S$205 million as a prudent measure to strengthen general provision reserves to S$4.16 billion in light of recent developments that have added to macroeconomic and geopolitical uncertainty.

It announced an ordinary dividend of 60 Singapore cents per share and a capital return dividend of 15 cents for the first quarter.

DBS’s first-quarter return on equity was 17.3 per cent, down from 19.4 per cent a year ago.

Net interest margin, a key gauge of profitability, dropped to 2.12 per cent in the first quarter from 2.14 per cent in the same period a year earlier.

Oversea-Chinese Banking Corporation is scheduled to report its results on Friday.