The largest bank in Singapore, DBS Group (DBSM.SI), announced on Monday that its third-quarter net profit increased by a better-than-anticipated 18% due to rising interest rates, which it predicted would also support further profit growth in the upcoming year.

The largest lender in Southeast Asia, DBS, has already predicted a record full-year profit for this year.

“Net profit (for 2024) to be maintained around the record 2023 level,” Piyush Gupta, the CEO, stated following the results announcement in a briefing. “As we enter the coming year, higher-for-longer interest rates will be a net benefit to earnings, while our solid balance sheet with ample liquidity, prudent general allowance reserves, and healthy capital ratios will provide us with strong buffers against macro uncertainties,” Gupta stated.

After government actions implemented since mid-year, Gupta expects a “bottom” in China’s enormous property market and economic recession. He also mentioned that DBS is not directly involved in the Middle East war.

From July to September last year, the bank’s net profit increased to S$2.63 billion ($1.94 billion) from S$2.24 billion. This was due to record-breaking growth in total income from more significant interest margins and fee income.

That exceeded the S$2.5 billion average expectation that four experts LSEG polled provided. Despite this, the bank’s special allowances of S$197 million were more than in previous quarters because it had put up contingencies for exposure related to one of the biggest-ever suspected money laundering cases in Singapore. Banks have increased their monitoring as a result of the incident. Additionally, Gupta anticipated that the bank’s 2024 net interest income would be comparable to this year’s level and that cards and wealth management would continue to drive fee income growth.

According to the statement, he also predicted that next year’s profit before allowances would be more significant and that overall allocations would normalize to 17–20 basis points of loans.

Yeap Jun Rong, the market analyst for IG Asia, stated, “DBS seems to provide some reassurances that it sees the higher-for-longer interest rates as a net benefit to its earnings into 2024.” “This provides some much-needed comfort when loan demand continues to soften.”

In addition to higher interest rates worldwide, Singapore banks have benefited from sizable capital inflows due to the city-state’s political stability. However, uncertainties in the global economy may impact Singapore’s economic prospects. The nation’s central bank maintained the same monetary policy parameters in October and April. The smaller counterpart, United Overseas Bank (UOBH.SI), revealed last month that its third-quarter net profit decreased by less than anticipated by 1%.

On November 10, Overseas Chinese Banking Corp. (OCBC.SI) is scheduled to release its quarterly results. The nation’s central bank this Monday prohibited DBS from acquiring new companies or making non-essential IT modifications for six months to make sure the company concentrates on strengthening its online banking systems, which have seen multiple outages this year. DBS will implement a “comprehensive set of measures” to remedy the digital disturbances, according to Gupta.