DBS

DBS: 2Q12 results, slightly above consensus. Net profit rose 10% yoy to $810m, above Dow Jones consensus of $797m, and Bloomberg consensus of $807m. Overall, this was driven by strong lending growth and a decline in allowances. However, net profit was 13% lower qoq, mainly due to a decline in mkt-related income. Net interest income rose 10% yoy to $1.32b, as loan momentum picked up in 2Q (+4% QoQ, +22% yoy), led by regional corporate borrowing. However, this was offset by net interest margin (NIM) compression of 5bps qoq to 1.72%. Non-interest income was -3% yoy, -42% qoq, to $621m, due to lower trading gains on subdue mkts. The non-performing loan rate remained stable at 1.3%. Allowances fell 24% yoy to $104m. Interim div of 28cts declared, unchg yoy. Scrip div will be applicable. DBS remains committed to its purchase of Bank Danamon Indonesia (BDMN.JK), in a deal worth US$7.3b, and says it will be fully guided by Bank Indonesia at every step of the way. The stock trades at 1.2x P/B.