DBS Group Holdings

UOBKayhian on 3 Nov 2014

FY14F PE (x): 11.5
FY15F PE (x): 10.8
DBS Group Holdings (DBS) reported net profit of S$1,008m for 3Q14, above our
forecast of S$949m. Boost from stable margins. Loans expanded 1.7% qoq and 8.1%
yoy with growth from Singapore and Hong Kong for corporate loans and secured
consumer loans. Trade loans were flat due to a slowdown in China and lower
commodity prices. Net interest margin (NIM) edged up 1bp to 1.68% due to improved
asset yields and stable funding costs. Net interest income grew a hefty 13.9% yoy.
Maintain BUY. Our target price of S$22.68 is based on 1.51x P/B, derived from the
Gordon Growth Model (ROE: 11.0%, required return: 7.8% and constant growth: 1.5%).