DBS posted net earnings of S$1.2b this morning, down 5% YoY and up 20% QoQ, and this is better than market expectations of S$1.04b. Excluding one-off items in 1Q15, net earnings would have been up 6% YoY, and this is another record high for the group.

Net Interest Income was up 8% YoY and down 1% QoQ to S$1.83m, while Non-interest Income was down 2% YoY and up 29% QoQ to S$1.03b (excluding one-off). Net Interest Margin (NIM) improved from 1.69% in 1Q15 and 1.84% in 4Q15 to 1.85% in 1Q16.

Cost-to-income came off slightly from last quarter’s 46.8% to 44.2% this quarter. Allowances also fell from S$181m in 1Q15 and S$247m in 4Q15 to S$170m this quarter. We will provide more details after the analysts’ briefing later in the day. We have a BUY on DBS but will be re-looking our earnings estimates and fair value estimate after the briefing.

Source: OCBC Research - 3 May 2016