Macquarie is pleased to list new warrants expiring in 2015, our longest expiries in Singapore, over the three banks and SGX. The warrants allow investors to take a leveraged view on these names over a long period of time.

 
The warrants are listing amid the companies’ earnings releases. DBS and UOB reported yesterday while OCBC announced this morning.
 
DBS – results in line with expectations
Released before market yesterday evening, DBS’s 2Q13 net income came in at $887mn which was in line with street consensus. The bank saw higher fees and commissions, and
trading income.
 
DBS shares led the local benchmark higher yesterday with its 2.6% gain to $17.13, its highest since 31 May. The share price may also have received a boost from the lapse of its US$6.5bn offer for Indonesia’s sixth largest lender Danamon, which according to Bloomberg, may have eased investors’ concern that DBS may be paying too much for a minority stake.
 
Danamon deal off the table
When DBS first made their bid for Danamon 16 months ago, it said that 2011 revenue from South and Southeast Asia would have increased to 27% from 7% with Danamon, while its reliance on Singapore would have declined to 49% from 62%.
 
Yesterday, DBS’ CEO expressed that he remains “very bullish on Indonesia,” where DBS’s profit has tripled in the last three years. With the Danamon deal off the table, DBS will now “redouble organic efforts in Indonesia.”  Danamon shares plunged the most in 4.5 years yesterday.
 
 
UOB – results beat estimates
Counterpart UOB released their results after market, with its 2Q net income rising 9.8% from the previous year to $783mn, beating street estimates of $700mn. Like DBS, UOB’s results were also led by gains in fee income.
 
UOB is the second best performer after DBS among the three banks, rising 10% year to date and far exceeding the 3% decline in the Bloomberg Asia Pacific Banks Index.
 
OCBC – results disappoint
The last of the three to report, OCBC’s 2Q13 results which came in this morning showed declining profit of 8% from the same period a year ago to $597mn, below the $600mn street estimates. Its net interest margin had narrowed to 1.64% in the quarter from 1.77% a year earlier.
 
Two days ago. OCBC’s 87%-owned insurance subsidiary Great Eastern had reported extremely weak 2Q13 net profits of $19m, a 77% slide from the same period last year and just a fraction of Macquarie Equities Research’s (MER) $179m forecast.
 
In a report released on 31 July, MER stated that this foreshadowed a relatively weak 2Q13 result from OCBC and thus projected a 10% downside risk to their original forecast of $679mn for today’s results and have a Neutral rating on OCBC with a 12-month target price of $9.82.

Source: Macquarie Research - 2 Aug 2013