DBS released its FY13 results this morning. 4QFY13 net earnings came in at S$973m (including one-off item of S$221m from the divestment of its stake in the Bank of Philippine Islands and less S$50m for the DBS Foundation), giving full year net earnings of S$3.672b (or S$3.5b before oneoff items). This is slightly below market expectations of S$3.6b, according to Bloomberg. While FY13 Net Interest Income came in just slightly above our expectations (actual of S$5569m versus our projection of S$5567m), the main variance in our projection versus actual result was largely from lower Non-interest Income, which came in lower than our expectations (excluding one-off items). Loans growth grew 18% to S$248.6b by end 2013. Net Interest Margin (NIM) improved slightly from 1.60% in 3Q13 to 1.61% in 4Q13. Cost-to-income ratio eased slightly from 44.8% in FY12 to 43.9% in FY13. For 4Q13, the key improvement in fee and commission income came from Investment Banking (+59%), Wealth Management (+25%) and Cards (+15%). Management has declared final dividend of 30 cents, up from 28 cents previously. This brings total full year dividend to 58 cents. DBS shares will trade ex-dividend on 12 May 2014. We will provide more details after the result briefing later in the morning. Meantime, we are likely to maintain our BUY rating but will look to review our estimates and current fair value estimate.

Source: OCBC Research - 14 Feb 2014