Singapore’s lenders have long benefited from the city state’s large populations of citizens of Indian and Chinese heritage. This has improved access to respective markets. The largest Singaporean bank, DBS, has just delivered an earnings beat on expectations for the last quarter. But DBS and its peers may now benefit less from diversification than hoped.
Net income at DBS jumped 69 per cent to S$2.3bn ($1.8bn). Rising interest rates, a write-back of general provisions and loan growth have boosted earnings. The net interest margin rose to more than 2 per cent. Returns on equity hit a quarterly record of 17.2 per cent. Bad debt levels fell.
Most strikingly, DBS disclosed an exposure of about $1bn to the Adani Group. US short seller Hindenburg Research has accused the Indian conglomerate of accounting fraud and stock manipulation, claims that Adani vehemently denies.