DBS posted 3Q13 net earnings of S$862m which were slightly better than market expectations. Net Interest Income touched a new high of S$1.41b. Loans grew 19% to S$242b as of Sep 2013. Net Interest Margin (NIM) eased off 2bp from the last quarter to 1.60% in 3Q13. Non-interest Income increased 11% YoY to S$744m. The positive uptrend for several growth units remained intact; namely Wealth Management, Trade and Transaction Services and Treasury customer flows. Cost/income came off from 45% in FY12 to 43% in 9M13. Despite the muted outlook for the global economic, management remains generally positive and expects its loans book to grow 8-10% in 2014. We are leaving our FY13 and FY14 net earnings largely intact, with some minor line adjustments. We are also keeping our fair value estimate of S$18.28. DBS remains our top pick in the sector. BUY.
3Q net earnings was above both street and our expectations
DBS generated 3Q13 net earnings of S$862m which were slightly better than consensus estimate of S$839.4m (based on Bloomberg). Net Interest Income rose 6% YoY or 2% QoQ to a new high of S$1.41b. Loans grew 19% to S$242b as of Sep 2013. Net Interest Margin (NIM) eased off slightly from 1.62% in the previous quarter to 1.60% in 3Q13. Non-interest Income increased 11% YoY to S$744m. This benefited from several contributors including Fee Income (+9% YoY to S$462m) and Trading Income (+45% YoY to S$188m). The former was led by better contributions from Trade and Transaction Services, Wealth Management and Cards. On trading income, the delay in Fed tapering in Sep led to lower income, but this was mitigated by increased business from customers’ trades. Core Equity Tier 1 ratio was 13.3%, Tier 1 was 13.3%, Total Capital Adequacy Ratio was 15.9% as of Sep 2013.
Improvement was fairly across the board; positive uptrend
On the Non-interest Income front and based on quarterly averages, Wealth Management income grew from a quarterly average of S$71m in FY12 to S$100m in 9M13. Trade and Transaction Services improved from S$118m to S$135m for the same period. For Treasury customer flows as a percentage of total treasury income, this grew from 27% in 2009 to 49% for 9M13. It also saw lower expenses, resulting in cost/income ratio of 43% in 9M13 versus 45% in FY12. NPL ratio remained stable at 1.2%.
Management is positive; maintain BUY
Despite challenging market conditions, DBS delivered an above expectations 3Q results scorecard. Management’s tone remains generally positive, although it expects the mortgage book to ease off in 2014. It does not expect NPLs to build up and will be watching costs against the current backdrop of muted global economic growth outlook. Management has guided for 8-10% growth for its loans book in 2014. We are leaving our FY13 and FY14 net earnings largely intact, with some minor line adjustments. We are also keeping our fair value estimate of S$18.28. BUY.
DBS generated 3Q13 net earnings of S$862m which were slightly better than consensus estimate of S$839.4m (based on Bloomberg). Net Interest Income rose 6% YoY or 2% QoQ to a new high of S$1.41b. Loans grew 19% to S$242b as of Sep 2013. Net Interest Margin (NIM) eased off slightly from 1.62% in the previous quarter to 1.60% in 3Q13. Non-interest Income increased 11% YoY to S$744m. This benefited from several contributors including Fee Income (+9% YoY to S$462m) and Trading Income (+45% YoY to S$188m). The former was led by better contributions from Trade and Transaction Services, Wealth Management and Cards. On trading income, the delay in Fed tapering in Sep led to lower income, but this was mitigated by increased business from customers’ trades. Core Equity Tier 1 ratio was 13.3%, Tier 1 was 13.3%, Total Capital Adequacy Ratio was 15.9% as of Sep 2013.
Improvement was fairly across the board; positive uptrend
On the Non-interest Income front and based on quarterly averages, Wealth Management income grew from a quarterly average of S$71m in FY12 to S$100m in 9M13. Trade and Transaction Services improved from S$118m to S$135m for the same period. For Treasury customer flows as a percentage of total treasury income, this grew from 27% in 2009 to 49% for 9M13. It also saw lower expenses, resulting in cost/income ratio of 43% in 9M13 versus 45% in FY12. NPL ratio remained stable at 1.2%.
Management is positive; maintain BUY
Despite challenging market conditions, DBS delivered an above expectations 3Q results scorecard. Management’s tone remains generally positive, although it expects the mortgage book to ease off in 2014. It does not expect NPLs to build up and will be watching costs against the current backdrop of muted global economic growth outlook. Management has guided for 8-10% growth for its loans book in 2014. We are leaving our FY13 and FY14 net earnings largely intact, with some minor line adjustments. We are also keeping our fair value estimate of S$18.28. BUY.
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