DBS H120 net income drops by 26% to S$2.41bn ($1.77bn) but ahead of analyst forecasts.
Total allowances increase five-fold to S$1.94bn as general allowances of S$1.26bn are set aside to account for the Covid-19 pandemic.
Profit before allowances increase by 12% to a record S$4.71bn. Total income rises by 7% to S$7.75bn while expenses are stable.
Specifically, successful cost-control results in a first half cost-income ratio of 39% from 42% a year ago.
Net interest income increases by 1% to S$4.79bn as loan and deposit growth are offset by lower interest rates. Fee income rises by 1% to S$1.51bn with growth in the first quarter offset by a decline in the second quarter.
Loans are up by 5% in constant-currency terms from a year ago to S$375bn.
Higher deposit volumes also have a positive impact on net interest income. Deposits rise by 13% in constant-currency terms from a year ago to S$447bn.
First-half net interest margin decline by 16 basis points y-o-y and 14 basis points from the previous half to 1.74%.
DBS H120 retail banking highlights
Consumer Banking and Wealth Management income declines by 3% from a year ago to S$3.08bn. Lower contributions from deposits and cards more than offset increased investment product and loan income. Cards and bancassurance rebounded in June but remain below pre-Covid levels.
Institutional Banking income is down by 1% to S$3.01bn as a decline in cash management income due to lower interest rates more than offsets the benefit of higher loan volumes and treasury product sales. Treasury Markets income increases 44% to S$714m due to a strong trading performance. Looking ahead, DBS says that full year performance remains in line with guidance given in the first quarter. For example, DBS expects loan growth of around 5% for the full fiscal. In addition, DBS expects a full year net interest margin of about 1.6%.