UPDATE 3-DBS boosts Q1 profit to record; "firing on all cylinders"

* Q1 net profit at S$2.0 bln vs S$1.43 bln average estimate

* Profit doubles from the fourth quarter

* Results boosted by all-round performance

* Bad loan formation drops to pre-pandemic levels

* DBS CEO says will look at Citi’s Asian consumer business (Recasts; adds quotes, industry context)

SINGAPORE, April 30 (Reuters) - DBS Group trounced profit estimates thanks to strong loan growth, improved asset quality and a bumper quarter for its wealth management business, pushing shares in Southeast Asia’s largest bank up 2.5% to a three-year high.

The Singapore-based lender flagged bullish prospects in a recovering global economy and said its new non-performing assets formation in the first quarter was below pre-pandemic levels.

“This was a bit of a golden quarter for us. Loan and deposit growth were robust, fees were strong and treasury had a record performance,” said Chief Executive Officer Piyush Gupta, adding that the bank “fired on all cylinders.”

It reported net profit of S$2.0 billion ($1.1 billion) for January-March versus the S$1.43 billion average of three analyst estimates compiled by Refinitiv, and versus S$1.16 billion in the year-ago period.

Profit doubled from the fourth quarter. The bank also had a write-back of past credit allowances as asset quality improved.

DBS, which earns most of its profit from Singapore and Hong Kong, upgraded its full-year loan growth forecast to the mid-to-high single digits and said fee income would grow at double digits.

“It’s quite a strong beat. Importantly, the low credit costs were to reverse previously very prudent and aggressive front loading last year, that helped too,” said Kevin Kwek, a senior analyst at Stanford C. Bernstein.

“Fees were up strongly across most categories – cards, treasury, transactions, wealth,” Kwek said.

The results came a day after larger Asia-focussed bank Standard Chartered reported forecast-beating results, beginning a recovery from its COVD-19 pandemic-hit performance.

Earlier this month, DBS agreed to buy a 13% stake in a privately-owned Chinese bank for $814 million, marking it’s biggest acquisition in China. This came months after it completed the takeover of distressed lender Lakshmi Vilas Bank in India, a key growth market.

Responding to a query on whether DBS was keen to acquire Citigroup’s Asian consumer business, Gupta, who had worked at Citi for 27 years, told reporters: “We are always open to looking at assets that could be incremental to our franchise. In due time, we will take a look at them.”

Reuters reported this month that DBS and other banks are set to bid for parts of Citi’s consumer business in Asia, following the U.S. bank’s plans to exit from these businesses, 10 of which are in Asia.

Analysts expect Singaporean banks’ profit to rebound strongly this year on sustained growth in wealth management. But lenders are still hit by low market interest rates that have crimped net interest margins - a key gauge of profitability.

The net interest margin at DBS fell to 1.49% in the latest quarter from 1.86% a year earlier but was stable from the previous quarter. ($1 = 1.3265 Singapore dollars) (Reporting by Anshuman Daga; Editing by Himani Sarkar, Christopher Cushing and Kim Coghill)