DBS

DBS: Strong set of results which was way ahead of estimates. Net profit reached a record $950m vs street estimates of $824m, + 25% q/q and +2% y/y. Total income hit a new qtrly high at $2.32b, +7% y/y and +18% q/q, led by loan and deposit vol growth as well as a broad-based increase in non-interest income. Net interest income at $1.33b, -1% y/y and +3% q/q, which included $4b of short-term financing for a corporate client, baring which underlying loan growth of 4% was led by trade finance, while grp’s Net interest margin increased 2 b.p q/q to 1.64% as underlying margin trends were stable from the previous qtr. Non-interest income increased 49% q/q to a record $990m, as Fee income rose to a new high at $507m, +25% y/y and +36% q/q, led by contributions from its wealth management and trade and transaction services, while loan-related fee income was also higher. In addition, stock broking and investment banking benefited from stronger capital market activities during the qtr. Other non-interest income +17% y/y and +64% q/q to $483m as customer income from cross-selling treasury products doubled to a qtrly high of $299m and accounted for 48% of total Treasury income. Trading gains were also higher due to more favorable market conditions. Overall, grp’s fundamentals remains strong, with capital adequacy ratios maintained. DBS had a Tier 1 ratio of 12.9% and total capital adequacy ratio of 15.5% based on the Basel III capital frameworks which are above the standards prescribed by MAS. The grp had also doubled general allowances to cater for the stronger loan growth. DBS CEO note that after a slower 2H12, the grp started the year on a very solid note. Business momentum is strong, and growth has been broad-based, showing the impact of grp’s investments across all lines of business. Grp also benefited from favourable market conditions, enabling it to turn in yet another quarter of record earnings. At current price, DBS trades at 1.26x P/B