DBS posted 2Q net earnings of S$887m, up 10% YoY and -7% QoQ. Net Interest Margin (NIM) eased off from 1.72% in 2Q12 and 1.64% in 1Q13 to 1.62% in 2Q13. Management guided that NIM is likely to stay at around 1.6%. An unchanged interim dividend of 28 cents has been declared. The long delayed acquisition of PT Bank Danamon Indonesia has lapsed. While this is a slight disappointment for its Indonesian strategy, it is not totally unexpected. Management reassured that it will still continue to pursue organic growth in the country for its existing business. Management is also not overly concerned about its Singapore mortgage portfolio, as most are for owner occupied unit. We have adjusted our earnings for FY13 slightly from S$3500m to S$3577m. We are maintaining our BUY rating and fair value estimate of S$18.28.
2Q earnings were in line with expectations
DBS Group Holdings posted 2Q net earnings of S$887m, up 10% YoY and -7% QoQ. This is in line with consensus estimate of S$883m. Net Interest Margin (NIM) eased off from 1.72% in 2Q12 and 1.64% in 1Q13 to 1.62% in 2Q13. In terms of fee income, the top performers were Investment Banking, up 82% in 1H to S$111m, followed by Wealth Management (+44% to S$214m) and Stockbroking (+29% to S$119m). An unchanged interim dividend of 28 cents has been declared. Stock will trade ex-divided on 15 Aug and dividend will be paid on or about 7 Oct 2013.
Ceased Bank Danamon acquisition
DBS announced that the long delayed acquisition of PT Bank Danamon Indonesia has lapsed. While this is a slight disappointment for its Indonesian strategy, it is not totally unexpected as this acquisition has been long delayed with no clear outcome. Management is undeterred by this and will seek organic growth for its existing business in the country. Overall, while the Danamon acquisition would have fast-tracked its growth in Indonesia, we do not expect this development to be a drag on its expansion plans in Indonesia.
Not overly concerned about Singapore’s mortgage portfolio
While Asia is likely to face headwinds in the coming quarters, management is still positive about its organic growth strategies, which are bearing fruits as seen from this set of 2Q results. In addition, the slowdown in Asia is unlikely to have any major impact on its portfolio based on its internal stress tests. It is also readying itself to benefit from the potential steepening of the yield curve. In the Singapore mortgage space, management is also not overly concerned and shared that its concentration is largely in owner occupied mortgages, and most have only one mortgage loan with the bank. It has also guided for NIM to stay at close to the 1.6% level.
Maintain BUY
We have adjusted our earnings for FY13 slightly from S$3500m to S$3577m. We are maintaining our BUY rating and fair value estimate of S$18.28.
DBS Group Holdings posted 2Q net earnings of S$887m, up 10% YoY and -7% QoQ. This is in line with consensus estimate of S$883m. Net Interest Margin (NIM) eased off from 1.72% in 2Q12 and 1.64% in 1Q13 to 1.62% in 2Q13. In terms of fee income, the top performers were Investment Banking, up 82% in 1H to S$111m, followed by Wealth Management (+44% to S$214m) and Stockbroking (+29% to S$119m). An unchanged interim dividend of 28 cents has been declared. Stock will trade ex-divided on 15 Aug and dividend will be paid on or about 7 Oct 2013.
Ceased Bank Danamon acquisition
DBS announced that the long delayed acquisition of PT Bank Danamon Indonesia has lapsed. While this is a slight disappointment for its Indonesian strategy, it is not totally unexpected as this acquisition has been long delayed with no clear outcome. Management is undeterred by this and will seek organic growth for its existing business in the country. Overall, while the Danamon acquisition would have fast-tracked its growth in Indonesia, we do not expect this development to be a drag on its expansion plans in Indonesia.
Not overly concerned about Singapore’s mortgage portfolio
While Asia is likely to face headwinds in the coming quarters, management is still positive about its organic growth strategies, which are bearing fruits as seen from this set of 2Q results. In addition, the slowdown in Asia is unlikely to have any major impact on its portfolio based on its internal stress tests. It is also readying itself to benefit from the potential steepening of the yield curve. In the Singapore mortgage space, management is also not overly concerned and shared that its concentration is largely in owner occupied mortgages, and most have only one mortgage loan with the bank. It has also guided for NIM to stay at close to the 1.6% level.
Maintain BUY
We have adjusted our earnings for FY13 slightly from S$3500m to S$3577m. We are maintaining our BUY rating and fair value estimate of S$18.28.
No comments:
Post a Comment