DBS is Southeast Asia’s largest bank by total assets and a proxy for Asia’s growth and rising middle class via its operations spanning Hong Kong, Greater China and Southeast Asia. We see its earlier focus on technological investments as a key differentiating factor in improving customer experience and acquisition.

The bank  has moved to quarterly dividends from financial year 2019 to provide shareholders with a more steady income stream and aims to continuously pay sustainable and increasing dividends over time (50% payout ratio).

Following the 1Q20 quarterly dividend per share of $0.33/share, MAS has guided for FY20 DPS for the sector to be capped at 60% of FY19 DPS. DBS has guided for quarterly DPS of $0.18/share for the coming quarters from 2Q20-1Q21.

3Q20 CET1 ratio remains solid at 13.9% and is expected to remain in range of 12.5%-13.5%. BUY.

Source: OCBC Research - 6 Nov 2020