DBS

Nomura Research in a Dec 2 research report says: "Ample SGD liquidity (3Q SGD LDR at just 62%) continues to allow DBS to actively leverage the SGD-USD swap market, giving it a crucial edge in USD funding that is driving loan growth (YTD: 22%) as well as market share and customer acquisition (especially Chinese corporates). "Given stronger-than-expected YTD loan growth and non-interest income performance, we raise FY2011-2013F earnings by 2-7%. However, elevated dependence on potentially volatile USD funding, as well as on Greater China assets (c.30% of group) and corporate clients translates into an increased risk profile (and hence higher risk premium) for the franchise. "Reflecting net impact of forecast adjustment and increase in cost of equity input (to 9.5%), new GGM-derived target price is $15.80 or 1.2x FY12F book. MAINTAIN BUY."