SINGAPORE – DBS Group Holdings joined peers OCBC Bank and UOB in reporting earnings that were boosted by rising interest rates, while cautioning that risks remain in the global operating environment.

Singapore’s largest lender posted on Thursday (Aug 4) a 7 per cent increase in second-quarter net profit to $1.82 billion, its second highest on record and topping the $1.69 billion forecast by analysts in a Bloomberg poll.

DBS has declared a dividend of 36 cents per share for the second quarter, higher than the 33 cents a year ago. This brings first-half dividend to 72 cents per share.

The bank’s earnings inched up 1 per cent from the previous quarter.

Earnings for the first half of the year stood at $3.62 billion, down 3 per cent from a year ago as rising net interest income was offset by lower wealth management fees amid weaker market conditions and a moderation in treasury markets income from the previous year’s high, DBS said.

Chief executive Piyush Gupta said the bank delivered a strong financial performance in the first half despite challenging financial market conditions

Net interest margin rose for the first time in three years and accelerated in the second quarter, while business momentum and asset quality were sustained, he noted.

“While the macroeconomic outlook remains uncertain, we will benefit from rapidly rising interest rates and have proven nimble in capturing business opportunities… Our ongoing stress tests indicate that asset quality continues to be robust,” he added.

Second-quarter net interest income jumped 17 per cent year on year to $2.45 billion in the second quarter. Net interest margin – a key gauge of banks’ profitability – rose 13 basis points to 1.58 per cent, and loans grew 7 per cent.

The bank said the impact of interest rate hikes was more fully felt this quarter, compared with the previous three months.

However, fee income fell 12 per cent year on year to $768 million as lower contributions from wealth management and investment banking more than offset increases in other fee activities.

Other non-interest income stood at $570 million, down 10 per cent from a year ago due to weaker market conditions.

Expenses rose 7 per cent from a year ago due to higher staff costs, while total allowances set aside for bad loans fell 42 per cent.

The earnings report wraps up local lenders’ results season. OCBC’s second-quarter net profit jumped 28 per cent to $1.48 billion, while UOB’s rose 11 per cent to $1.11 billion.