DBS

DBS: blow out 1Q12 results. Net income advanced to a record $933m, +16% yoy, +28% qoq, trouncing Bloomberg consensus estimates of $755m. Main drivers were continued loan growth and strong non interest income. ROE rose to 12.8% vs 11% for FY11. Net interest income was at a record $1.34b, +4% qoq. Loan growth slowed to +1.5% qoq, vs +4.9% qoq in 4Q11, but the surprise came from net interest margins (NIM), which outperformed expectations, at 1.77%, down from 1Q11's 1.80%, but up from 4Q11's 1.73%. Non-interest income also came in at a new high of $820m, +31% qoq. Trading income more than doubled to $292m from higher customer flows and more favorable mkt conditions. Net fee income expanded 19% qoq to $406m, as mkt-sensitive stockbroking and wealth mgt biz grew 24% and 39% qoq rptvly. Asset quality remained strong, as non-performing assets were unchg qoq at $2.91b, with the NPL rate stable at 1.3%. UOBK maintains at Buy with TP $16.20. Notes the potential dilution from acq of Bank Danamon could already be reflected in its current share price. Given the recent weakness in DBS share price, this surprise set of results could be just the catalyst for the stock to play catch up.