DBS delivered a strong set of 1Q18 results this morning, beating street estimate by a wide difference. Net earnings came in at S$1.51b, improving both YoY and QoQ, or up 21% YoY and 27% QoQ. This compared to consensus estimate of S$1.4b.

Net Interest Margin (NIM) improved from 1.74% in 1Q17 and 1.78% in 4Q17 to 1.83% in 1Q18. Cost-to-income ratio improved from 44.4% last quarter to 41.6% this quarter. NPL ratio came off from last quarter’s 1.7% to 1.6%. ROE improved from 10.5% last quarter to 13.1% this quarter.

Fee Income jumped 12% YoY and 17% QoQ to S$744m, the key contributor was its Wealth Management business which saw a sharp increase of 49% YoY to S$331m, forming 39% of total Fee Income now.

We will provide more details after this morning’s briefing. We are maintaining our BUY rating, but will be reviewing our FY18 estimate and fair value estimate after the briefing.

Source: OCBC Research - 30 Apr 2018