SINGAPORE — There are signs that higher prices will become “more entrenched” and harder to reverse, according to the chief executive of Singapore’s largest bank.  

“You’re beginning to see more entrenched inflation coming through,” Piyush Gupta, CEO of DBS Group Holdings, told CNBC’s “Capital Connection” Friday. “Some of the inflation that we’re seeing is really wage inflation. Salaries are beginning to dial up and I don’t think those are so easy to reverse.”

The Federal Reserve on Wednesday maintained that price increases in the U.S. are “transitory.” But rising inflation in the U.S. and other major economies has led to concerns among investors that central banks would be forced to hike interest rates earlier, and faster, than expected.

While inflation could increase costs, higher interest rates are beneficial for banks, Gupta said as DBS reported third-quarter earnings that beat analysts’ estimates.

The bank on Friday reported a net profit of 1.7 billion Singapore dollars ($1.26 billion) for the July to September quarter — 31% higher than a year ago and exceeding an average forecast of 1.57 billion Singapore dollars on Refinitiv.   

DBS shares were up 0.3% in early trade on Friday. The stock has climbed 28.6% this year as of Thursday’s close, beating the benchmark Straits Times Index‘s gains of 13.2% in the same period.

Net interest margin, a measure of lending profitability, was two basis points lower than the previous quarter at 1.43% due to lower short-term interest rates.

But Gupta said that’s likely the worst in the bank’s margins as rates have started to pick up and some central banks – such as those in Singapore and South Korea – have tightened monetary policy.

“My own sense is we have seen the worst of the rate cycle, from our standpoint of course, and you will see some pick up,” said the CEO.

“I do think central bank policy action is bias towards tightening, the pace of it is a little bit uncertain,” he added.

Here are other highlights of the bank’s third-quarter earnings:

• The bank wrote back 70 million Singapore dollars in allowances — previously set aside for potential loan losses — as economic recovery continues.
• The DBS board declared a quarterly dividend of 33 Singapore cents per share.  

The release of DBS’ financial results rounded up the reporting season for Singapore’s top banks.

Earlier this week, the other two banks — Oversea-Chinese Banking Corp and United Overseas Bank — also reported third-quarter earnings that beat expectations.  

OCBC‘s net profit rose 19% from a year ago to 1.22 billion Singapore dollars ($904.5 million), while UOB reported a 57% rise in net profit to 1.05 billion Singapore dollars in the same period.