DBS: Nomura reiterates Buy, and increases TP to $17.30 from $15.80. Note of balanced growth strategy and maturing restructuring efforts to sustain franchise momentum. FY12F net interest income growth should stay strong (17%, vs. FY11’s 12%) as:
1) loan growth has upside risk on sustained regional credit demand and DBS’ increasingly diversified liquidity base, and
2) NIM, now forecast to be flat yoy (FY11: 7bps decline), has positive traction on stabilising SGD rates and rising USD yields, supported by SGD CASA improvement (85%) and rising room for higher-margin USD term financing.
Catalysts: Tangible delivery on strategic franchise-restructuring initiatives, improving USD funding base and signs of a soft-landing for the Chinese economy. Raise FY12-13 earnings forecast by 4-5%, while concerns relating to high USD LDR and sizeable exposure to a China hard-landing scenario have eased.
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