DBS

DBS posts un unexpected 2Q10 loss of $300m after taking a $1.02bn goodwill charge on its HK business. Excluding this one-ff item, core earnings grew 30% to $718m, above consensus estimate of $572m. The core out-performance was due to faster loans growth, trading gains, cost discipline and decline in specific provisions.

Operating trends strengthened as DBS expanded its loan market share and customer-driven non-interest income. Loans grew 9% but was offset by a decline in NIM by 9bps to 1.84%. Non-interest income rose by 16% on the back of a 5% increase in fee income and 21% increase in trading income. Operating costs was well contained with expense ratio at 39.5%.

NPL ratio decreased from 2.8% to 2.3%. Allowance coverage exceeded 100% as additional general allowances were taken and asset quality continues to improve. Book value fell to $10.88 from $11.20 in 1Q. The bank declared an interim DPS of 14¢/share, same as the previous period.