Regional Banking- DBS Group: Maintain Sell

Susceptible to headwinds

Earnings risk. With Singapore, Hong Kong and Greater China accounting for about 86% of 2011 pretax, DBS’s earnings are susceptible to a slowdown in China and the global economies, while corporate/treasury exposure (81% of earnings, vs. 65% for OCBC and 66% for UOB) add to the volatility. Valuations reflect the low prospective ROE of 10.3% that we are projecting, with downside risk, in our view. Strong fundamentals notwithstanding, our Sell call is maintained, with an unchanged TP of RM11.50 (2012 P/BV of 0.9x).
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Source: Maybank-Kim Eng Research 30 March 2012