Towards Financial Freedom
DBS - Sequentially weak 4Q12 core earnings
DBS reported 4Q12 net profit of S$1.21b, in line with our expectation of S$1.23b. Excluding the one-time 4Q12 S$450m gain from partial divestment of a stake in BPI, net profit would have been S$760m, down 11% QoQ. This sequential weakness is attributed to fee & commission income contracting 12% QoQ, expenses rising 5% sequentially, and allowances more than doubling. We will provide more colour on the results after the analyst briefing. Our recommendation is likely to remain unchanged, although we may
finetune our earnings forecast and target price.
Some strengthening in 4Q12 loan. Loans expanded 4% QoQ, which resulted in FY12 loan growth of 8%. This is close to our 9% estimate. The sequential strength is attributed to Greater China loans rising 5.7% QoQ, reversing the weakness in prior quarters. Singapore
loans grew a mild 2.9% QoQ.
NIM continues to be under compression pressure. NIM of 1.62% was a 5 bps decline QoQ, due to a decline in corporate loan spreads, yields for investment securities, and average loan deposit ratio. The NIM contraction was 11 bps YoY. DBS HK recorded NIM of 1.55%, which is flat versus 3Q12's 1.54%.
Net fee & commission income declined 12% QoQ to S$372m. Investment banking fees halved from the previous quarter, which benefited from high debt market issuances. Loan-related fees were also lower.
DBS made allowances totaling S$114m, more than double 3Q12's S$55m. Both general allowances and specific allowances more than doubled QoQ. This was despite the NPL ratio declining slightly to 1.2%.
The Board declared a final dividend of 28S¢/share, bringing the full-year payout to 56S¢/share. The scrip dividend will be applicable to the final dividend.
Source: OSK
finetune our earnings forecast and target price.
Some strengthening in 4Q12 loan. Loans expanded 4% QoQ, which resulted in FY12 loan growth of 8%. This is close to our 9% estimate. The sequential strength is attributed to Greater China loans rising 5.7% QoQ, reversing the weakness in prior quarters. Singapore
loans grew a mild 2.9% QoQ.
NIM continues to be under compression pressure. NIM of 1.62% was a 5 bps decline QoQ, due to a decline in corporate loan spreads, yields for investment securities, and average loan deposit ratio. The NIM contraction was 11 bps YoY. DBS HK recorded NIM of 1.55%, which is flat versus 3Q12's 1.54%.
Net fee & commission income declined 12% QoQ to S$372m. Investment banking fees halved from the previous quarter, which benefited from high debt market issuances. Loan-related fees were also lower.
DBS made allowances totaling S$114m, more than double 3Q12's S$55m. Both general allowances and specific allowances more than doubled QoQ. This was despite the NPL ratio declining slightly to 1.2%.
The Board declared a final dividend of 28S¢/share, bringing the full-year payout to 56S¢/share. The scrip dividend will be applicable to the final dividend.
Source: OSK
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