Friday, July 29, 2011


DBS: Recall 2Q Net Profit of $735m vs net loss of S$300m a yr ago due to a goodwill charge on its HK business, slightly above analysts forecasts of S$728m,
helped by strong loan growth. Broker ratings are as per follow.

DMG maintain N, TP $15.70 from $15.00, trading income weaker but interest income up, expect SIBOR to remain soft till mid-2012 at least, and see no
key catalyst driving DBS share price.

BNP maintain Buy, TP $17.50, no surprises, both earnings and operating trends are within expectations, positives: stronger loan growth + flattish NIM + lower NPLs, DBS HK managed to eke out a 4bp NIM expansion. Catalysts: continued strong earnings delivery that reflects recent years of structural changes made by top management, and a sharp increase in SGD SIBOR (a likely scenario in 2H12).

RBS maintain Buy, TP $18.00. DBS reported a very solid set of 2Q11 results, main positive was a very strong 6.9% qoq growth in net interest income on back of stable margins and strong 7% qoq loan growth. DBS is trading at 10.1x FY12 PE with 15.0% EPS growth and 1.2x FY12 PB with 12.2% ROE.

UBS maintain Buy, TP $16.60, good quality earnings, believe: 1) the stock is inexpensive; 2) its strong loan growth can drive earnings; and 3) it has strong upside to the eventual reinstatement of higher rates.

Daiwa maintain Buy, TP $18.40 from $18.20, quality comes thru, on track to narrow its performance and ROE gap with its local peers by 2013, with the incremental gains leading to a gradual valuation rerating by the market.

Deutsche maintain Buy, TP $18.00, Top quality 2Q11; delivering on net interest income, on the path to a higher sustainable ROE.

Morgan Stanley O/w, TP $18.30 from $17.50, continued to show progress on its strategic transformation in 2Q11, especially in the institutional banking business. Valuations still attractive at 11.5x 2011e EPS and 10.9x 2012e EPS. Remains as top pick in the Spore bank sector.

Credit Suisse maintain N, TP $16.80, focus on liquidity near term, revise down 2011-13E EPS estimates by 2% mainly driven by slightly lower NIM expectations in 2012-13E, UOB is sector top pick.

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