We raise our FY14F loan growth by 1 ppt. Whilst the recent Singapore government measures (in Oct 2012 and Jan 2013) to cool the residential property market, plus possible further measures, could slow systemic housing loan growth going forward, the impact is seen to be lagged as drawdowns on approved loans will continue over the next few quarters. We believe this recent initiative from DBS reflects their intention to raise its share of loans from home mortgages - which at 21.3% is lower than OCBC's 26.3% and UOB's 29.6%. We rate this positively. Consequently, we raise our DBS FY14F loan growth to 7% from 6%. We also increase our FY14F net profit by 1% to SGD3.64b from
higher net interest income projections.

Rise in Singapore government bond yield a positive for NIM in subsequent quarters. Whilst a soft 1Q13 SIBOR is not positive for DBS' earnings, this is already factored into street expectations. Indications point to continued narrow NIM as a consequence of the rollover of securities portfolio and duration shortening. However, there could be some cushioning effects from the rise in the 10-year Singapore government bond yield to 1.47% (from 1.28% at the end of 2012).

Source: OSK