DBS Group Holdings Ltd, Southeast Asia`s biggest lender, forecast stable loans growth for 2019 after a robust increase in net interest margin drove an 8 percent rise in quarterly profit and a record annual profit. 

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After three years of strong loans growth, Singapore`s banks face tougher times as the city-state`s export-reliant economy slows, partly due to a trade war between China and the United States.

Data released on Monday showed Singapore`s exports fell 10.1 percent in January from a year earlier, the biggest drop in over two years.

DBS, nearly 30 percent owned by state investor Temasek Holdings, forecast mid-single-digit loans growth and high single-digit income growth for this year.

Loans grew 6 percent in constant-currency terms to S$345 billion ($254.4 billion) last year.

The bank reported a net profit of S$1.32 billion for October-December versus S$1.22 billion a year earlier, and in line with an average estimate of S$1.34 billion from three analysts, according to data from Refinitiv.

Full-year profit jumped 28 percent to a record S$5.63 billion as Singapore banks benefited from higher interest rates.

"We believe the result reads well for peers, for which street expectations are a lot lower," Jefferies analyst Krishna Guha said in a report, referring to the quarterly numbers.

DBS kicked off the reporting season for Singapore banks, with smaller peers Oversea-Chinese Banking Corp and United Overseas Bank reporting results on Friday. 

CEO Piyush Gupta said in a statement that DBS`s return on equity of 12.1 percent for 2018 was near its historical high of 2007, when interest rates were twice the current levels and capital requirements were less stringent.

DBS`s shift towards high-returns businesses and moves to boost profitability of its franchises would help it "navigate the challenges of the coming year", he said.

The bank`s net interest margin, a key gauge of profitability, improved by nine basis points to 1.87 percent in the latest quarter.

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Total income rose 6 percent as loan growth and a rise in net interest margin were moderated by a decline in treasury markets income, DBS said.

Its shares climbed 1.7 percent on Monday morning, outperforming the broader market which was up 0.9 percent.