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DBS Q3 net profit beats forecast though loan growth slows

A DBS Group Holdings Ltd. employee assists a customer at an automated teller machine in the company's headquarters at the Marina Bay Financial Centre in Singapore.
Munshi Ahmed | Bloomberg | Getty Images
A DBS Group Holdings Ltd. employee assists a customer at an automated teller machine in the company's headquarters at the Marina Bay Financial Centre in Singapore.

DBS Group Holdings, Southeast Asia's biggest lender, posted a 17 percent rise in quarterly profit, helped by its highest net interest margin in nine quarters though loan growth slowed to its weakest pace since late 2012.

The slowdown in lending growth reflects the downturn in Singapore's housing market after a series of government cooling measures and sluggish demand for China-related trade finance.

Loan growth slowed to 8 percent, the slowest year-on-year pace since the fourth quarter of 2012.

Rival Oversea-Chinese Banking on Thursday reported a 62 percent rise in quarterly profit on the back of a one-off gain, but the closely watched core profit was slightly below the average analyst forecast.

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Singapore's third-biggest lender, United Overseas Bank posted a rise of 18.7 percent in quarterly profit.

Piyush Gupta, a former Citibanker who became DBS chief executive in late 2009, has used the bank's strong balance sheet to raise its profile as one of Asia's leading trade finance players.

He has also invested in wealth management by buying Societe Generale's Asian private bank.

That strategy has boosted earnings - DBS recorded a net profit of S$2.2 billion ($1.72 billion) in the first half of this year, slightly above what it posted in the full year of 2010.

Nine-month earnings hit a record S$3.21 billion.

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"Despite some slowdown in the region, we continued to see very strong earnings momentum in the third quarter, fueled by broad-based growth across businesses," Gupta said in a statement.

DBS said net profit came to S$1.01 billion ($789.04 million) for the July-September period, versus S$862 million in the same period a year earlier and above an average forecast of S$971 million from five analysts polled by Reuters.

DBS's quarterly net interest income - the gap between what a bank makes from loans and pays on deposits - jumped 14 percent to S$1.6 billion.

DBS shares have outperformed OCBC and United Overseas Bank this year on strong earnings momentum.