DBS

DBS: Good set of 3Q12 performance, which saw core earnings in-line. Total income at $2b, + 1.6% yoy and +3% qoq, while net Profit at $856m, +12% yoy and +6% qoq. Total income was boosted as fee income rose to a record and net interest income was sustained at recent highs. Bottom-line was boosted as provisions fell sharply to $55m, vs $104m qoq. Net interest income rose 1% from qoq to $1.33b, as loans grew 1% excluding exchange translation effects to $202b, reflecting a slowdown in the region and a concentration of maturing trade loans during the quarter. Deposits grew by 5% qoq to $240b, resulting in an easing of the loan-deposit ratio to 84% from 89% qoq. NIM declined 5 bp qoq to 1.67%, reflecting prudent liquidity mgt as well as margin pressures in China. The impact of both factors was partially offset by margin improvements in SG and other mkts. Non-interest income rose 8% qoq to $672m. Most of the increase was due to an 11% rise in fee income to a record $422m as contributions from loan activities, investment banking and wealth mgt grew. Trading income was little changed at $130m. Asset quality continues to be strong. The non-performing loan rate was unchanged from qoq at 1.3% and unrealised marked-to-mkt gains for the available-for-sale investment portfolio increased to $624m from $519m qoq. CAR rose from 15.4% to 16.5% qoq, while Tier-1 increased from 12.8% to 13.4%. Both ratios were comfortably above regulatory requirements. CEO concludes that grp had yet another solid quarter, notwithstanding a notable slowdown in Asia and interest rate headwinds. Record fee income highlights the diversification and resiliency of its customer franchise. Add that the bank is well-capitalized and will continue to focus on managing its capital efficiently, especially with the introduction of Basel III next year.