SINGAPORE (May 3): DBS Group Holdings, Singapore’s biggest bank, posted record earnings of $1.20 billion, or 1.92 cents per share, for 1Q16.

This was above the average forecast of $1.017 billion from five analysts polled by Reuters.

1Q earnings was 5% lower compared to the $1.27 billion achieved a year ago in 1Q15 which included a one-time gain of $136 million from a disposal of a property investment.

However, earnings were 6% higher than a year ago when the one-time gain was excluded.

Total income also hit a new record, rising 5% to $2.87 billion as net interest income grew 8% to $1.83 billion.

Net interest income rose 8% to $1.83 billion. Loans declined 1% in constant-currency terms to $274 billion.

A 23% contraction in trade loans was offset by a 3% increase in non-trade loans from corporate borrowing and a 13% increase in Singapore housing loans.

Net interest margin improved 16 basis points to 1.85% in line with higher Singapore dollar interest rates.

Non-interest income was 2% lower at $1.03 billion. While fee income rose to a new high, trading income was affected by financial market volatility during the quarter.

Net fee income rose 3% to $574 million. Wealth management fees increased 5% to $176 million as bancassurance income grew 63% to $98 million. But fees from investment banking and brokerage fell in line with market conditions.

Other non-interest income declined 7% to $458 million. Trading income fell 12% to $315 million due to lower treasury customer activities. Gains from investment securities also fell.

Non-performing loan rate rose slightly to 1.0% while specific allowances increased 6% to $170 million, both of which were in line with earlier guidance.

Allowance coverage of non-performing assets remained healthy at 134% and at 286% if collateral was considered.

Specific allowances increased 6% to $170 million. No additional general allowances were taken in view of the healthy cumulative general allowances of $3.2 billion already built up.

DBS CEO Piyush Gupta says, “While we have had a succession of record earnings, this quarter’s performance is particularly satisfying because it was achieved in unusually challenging market conditions... Our continuing investments in regional businesses and efforts to reinforce risk management, together with a robust balance sheet, put us in a strong position to continue supporting customers and delivering consistent shareholder returns.”

Singapore lenders' profits are under pressure due to slowing Asian economies, particularly China, and weak commodity prices that have boosted provisions on loans to energy services firms.

DBS closed 0.46% higher at $15.359 on Tuesday.