Singapore-based financial service group DBS has reported a 20% drop in quarterly profit amid challenging market situations.

The bank posted a net profit of S$1.3bn ($951m) in the third quarter of this year, compared to $1.63bn posted in the same period a year ago.

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However, the latest figure represents a 4% jump from the previous quarter.

In the first nine months, DBS’ net profit declined 24% from a year ago to S$3.71bn. The drop was attributed to higher allowances, which quadrupled from a year ago to $2.49bn.

The total income of the company was S$3.58bn in 2020 Q3. This is a 6% drop from S$3.82bn registered in the previous year.

With increase in economic activity, DBS’ fee income jumped by 17% from the previous quarter to S$798m.

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The wealth management fees increased by 25% to S$380m, as investment and insurance product sales improved.

The company’s expenses also soared by 4% from the previous quarter to S$1.54bn due to the provision of Covid-19-related support for the staff and non-recurring occupancy costs.

DBS CEO Piyush Gupta said: “The third quarter’s results reflect a recovery in business momentum as regional economies emerge from lockdowns. The rebound in fee income to pre-Covid levels has enabled us to cushion the full impact of lower interest rates.

“At the same time, the accelerated build-up of allowances has strengthened our ability to meet the challenges of an uneven economic recovery in the coming year.

“In the longer term, Asia’s fundamentals remain undiminished. With ample liquidity and healthy capital, we remain well positioned to support customers and the community.”