The second quarter of the fiscal year 2020 has been really tough for all banking organizations in the world. DBS Group faced a significant slump in its net profits for the second quarter. The DBS bank incurred nearly 25% of the drop in its quarterly profits due to the COVID-19 pandemic situation.
Being Singapore’s leader in the global banking ecosystem, DBS Bank issued its report for the second quarter of 2020. According to the reports, the bank suffered a significant drop in its profits due to losses in its loan provision operations. The pandemic has badly hit the Southeast Asian market and there were near-zero developments in the sanctions of new loans as well as closures of pending loans. For DBS bank, which is one of South Asia’s top lender, recovering the payments and monthly installments of pending loans was a big challenge.
A majority of loan holders of the DBS bank were unable to generate a steady income during the past few months. The COVID-19 pandemic led to job losses and loss of business income. Hence, the payments of pending loans from the DBS bank were stalled. The fee income for the bank was the only thing that was rising.
The net interest margin of DBS bank fell from 1.91% in 2019 to 1.62% in the second quarter of 2020. The Singaporean banking giant saw its shares up by 2%, but they have been volatile in the past months. Last week, the shares spiraled down aggressively, which compelled the bank to cap its dividends. The DBS Group investors are keener towards the third quarter as they expect the bank to increase its net interest margins as a measure for boosting its profitability. DBS bank needs to make some big moves to effectively tackle its loan losses in the current recession-hit economies across South Asia.
