DBS posted 1QFY19 net earnings of S$1.65b this morning, up 9% YoY and 25% QoQ, this is better that consensus expectation of S$1.48b based on Bloomberg consensus estimate. The strong set of results came from the improvement in total income, which rose 6% YoY and 9% QoQ.

For QoQ, the increase came from the jump in Noninterest Income, which benefited from a 93% increase in Net Trading Income. Allowances came off from S$164m in 1Q18 and S$205m in 4Q18 to S$76m in 1Q19. Net Interest Margin improved from 1.83% in 1Q18 and 1.87% in 4Q18 to 1.88% in 1Q19.

Moving forward, DBS has also announced that it will pay quarterly instead of semi-annual dividends from FY19 to provide shareholders with a more regular income stream. For the 1Q, the dividend is 30 cents per share. The shares will quote ex-divided on 17 May 2019.

We will maintain our BUY rating, but will review our earnings estimates post the analyst’s briefing later in the morning.

Source: OCBC Research - 29 Apr 2019