DBS posted FY14 net earnings of S$4046m, up 10%. This is in line with our estimate of S$4023m, but below consensus estimate of S$4103m (based on Bloomberg). The variance is likely to be due to higher allowances in 4Q14, which surged up to S$211m, up 40% YoY and 19% QoQ, and lower trading net trading income of S$92m (down 44% YoY and down 66% QoQ).

Net Interest Margin (NIM) improved from 1.61% in 4Q13 and 1.68% in 3Q14 to 1.71% in 4Q14. Management has declared a final dividend of 30 cents (same as last year), bringing the full-year dividend to 58 cents. The stock will trade exdividend on 27 Apr 2015.

Prior to the results, we had a Buy rating on the stock with a fair value estimate of S$21.10. We will review our estimates and provide more details after the analysts’ briefing later in the morning.

Source: OCBC Research - 10 Feb 2015