(Aug 3): Singapore's biggest bank DBS Group said on Thursday (Aug 3) its second-quarter profit jumped a forecast-beating 48% to a new record as higher interest rates helped drive income growth, and forecast growth in its net interest margin (NIM).

DBS said the outlook for NIM, a key indicator of profitability, had improved due to unexpected US interest rate increases in the second half and a rise in the Hong Kong Interbank Offered Rate.

It looked forward to continued support from one-fifth of its commercial book yet to reprice and lower deposit repricing pressure than it had expected.

DBS shares rose 0.5% by midday on Thursday amid a slightly lower broader market.

DBS' views followed that of smaller peer United Overseas Bank, which last Thursday said it had a more positive outlook for NIM following the latest US rate rise after it chalked up a 27% increase in second-quarter earnings.

Besides higher interest rates, Singapore banks have also benefitted from strong inflow of wealth amid global uncertainty due to the city-state's status as a financial safe-haven.

Oversea-Chinese Banking Corp is due to announce its second-quarter results on Friday.

DBS, which is also Southeast Asia's largest lender by assets, expects another record year, projecting full-year return on equity at above 17%.

"We think we will have a record year," DBS chief executive officer Piyush Gupta told reporters in a briefing after the bank's earnings results.

"We do benefit from interest rate hikes," he said. "Our focus on digitising, on cash management, on both the corporate and consumer side and on wealth is really paying off."

DBS said April-June net profit hit a quarterly record high S$2.69 billion (RM12.3 billion) from S$1.82 billion a year earlier.

This exceeded the average estimate of S$2.41 billion from four analysts surveyed by Refinitiv.

DBS' NIM rose for sixth consecutive quarter to 2.16% during the quarter from 1.58% a year earlier.

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