Towards Financial Freedom
DBS - Down, But Still Solid
DBS' 2QFY13 results met our and consensus expectations. Loan growth remains healthy, net interest margin (NIM) held up well, noninterest income contribution remained at elevated levels and Management is comfortable with asset quality. With uncertainties vis-àvis the Danamon acquisition behind it, the Indonesia focus now is to ramp up organic growth. Maintain BUY call with FV of SGD18.70.
- No surprises. DBS reported 2QFY13 net profit of SGD887m (+10% y-oy; -7% q-o-q), which took 1HFY13 net profit to SGD1.8bn (+5% y-o-y). While 1HFY13's annualised earnings were 5% ahead of our and consensus FY13 estimates, we consider the results to be within expectations, as 2HFY13 net profit is expected to be softer. DBS declared an interim tax-exempt DPS of SGD0.28, similar to 2QFY12.
- Result highlights. The q-o-q net profit drop was mainly due to weaker non-interest income (-6% q-o-q); not too surprising given the tougher market conditions and the absence of chunky deal-related fees in 1QFY13. On a more positive note, loan growth was healthy (+5% q-o-q, led by trade loans and SGD corporate loans), NIM was broadly stable qo-q at 1.62% and SP charge-off was stable q-o-q at 22bps. The impact from the rise in bond yields was muted with respect to the income statement, but larger on the AFS book. AFS reserves fell to SGD96m at end-2QFY13 (1QFY13: SGD623m), although management said this had risen by about SGD60m post the quarter-end.
Source: OSK
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
