DBS: More tech progress, but trade war will hurt
Profits are up, but the markets hits it – for good and bad – for being the bank/tech hybrid Gupta has modelled.
A 76% year-on-year climb in third-quarter net profit, accompanied by a plunge in the share price on the day it is announced: these are complicated times for a bank in Asia, a region in the midst of a worsening trade war.
“Our own sense is that the direct impact of the trade war on the macroeconomics will not be as material as people worry,” chief executive Piyush Gupta said at the results briefing. “What is more worrying is the impact of market sentiment: the indirect impact of the trade war.”
He is right. If you take the sentiment out of it, DBS is doing just fine.
Third-quarter income, up 10%, was a record at S$3.38 billion ($2.47 billion); nine-month profit, at S$4.31 billion, is also a record. Profits are well up because the heavy allowances for oil and gas-support service exposures are now digested, and the formation of new non-performing assets is declining.