The second bank in Singapore to report its third quarter 2023 (3Q 2023) earnings is DBS Group (SGX: D05).

Peer United Overseas Bank (SGX: U11) reported strong results two weeks ago, with core net profit increasing to S$1.48 billion.

DBS exceeded expectations, as its core net profit for the third quarter of 2023 exceeded S$2.6 billion, surpassing the average forecast of S$2.5 billion provided by four analysts.

DBS recorded record-breaking overall income of S$5.2 billion for the third quarter of 2023, up 16% year over year.

In accordance with consistently rising interest rates, the superior performance was driven by a 23% year-over-year increase in net interest income (NII) for its commercial book division.

To S$843 million, net fee and commission income likewise grew by 9% annually.

Despite an annual increase in expenses of only 12%, the bank’s operating profit increased by 18% to S$3.2 billion in the third quarter of 2023.

The quarter’s net profit of S$2.5 billion includes increased particular provisions and a S$40 million penalty for DBS’s integration of its Citigroup (NYSE: C) Taiwan acquisition.

During the first nine months of 2023 (9M 2023), DBS recorded a record S$15.2 billion in total income, up 27% year over year. Additionally, profit before allowances increased 37% year over year to a record high of S$9.3 billion.

Additionally, 9M 2023’s core net profit set a new high, rising 35% year over year to S$7.9 billion.

The lender’s cost-to-income ratio increased by four percentage points to 39% in 2023, and its 9M 2023 return on equity reached a record 18.6%.

The blue-chip bank is expected to have a very successful quarter as a result of the rising interest rate environment, according to the data above.

Net interest margin (NIM) for the group both improved year over year and on a quarterly basis.

NIM increased from 1.9% in 3Q 2022 to 2.19% in 3Q 2023.

From 2.12% in the first quarter of 2023 to the present 2.19%, the NIM has increased gradually this year. According to CEO Piyush Gupta, higher-for-longer rates will sustain this NIM in 2024.

The group’s 9M 2023 NIM was 2.16%, a significant increase over the 1.65% recorded in the prior comparable period. The third quarter of 2023 saw strong fee income as well, increasing by 13.5% yearly to S$1.05 billion.

Stronger fees from investment banking and transaction services were counterbalanced by a rise in wealth management, card, and loan-related fees, which contributed to the higher performance.

In 3Q 2023, wealth management fees increased by 21.7% year over year to S$393 million, while costs associated with cards increased by 20.6% year over year to S$269 million.

On August 12 of this year, DBS successfully combined Citi Taiwan, forming the group that is now the largest foreign bank in the nation in terms of assets.

DBS’s deposit base increased by S$12 billion and its loan book gained S$10 billion as a result of the integration.

Additionally, it contributed to the tripling of DBS Taiwan’s investment assets under management to more than S$12 billion and a five-fold increase in credit card accounts to over three million.

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