DBS

DBS: PhillipCapital maintains an Accumulate rating with $19.09 TP; DBS is positioned strongly to benefit when short-term interest rates increase due to its higher CASA deposit base (3Q13: 58.4%) and higher SGD liquidity (SGD LDR 3Q13: 72.5%). House continue to be positive on DBS Group Holdings’ potential to benefit from an interest rate cycle revival in the medium term. The strong deposit franchise will help to mitigate higher funding cost from tightening system liquidity from the start of QE tapering. Also, House hold a positive outlook on Greater China and expect continued trade flows into the ASEAN region. DBS is also more anchored in developed markets, providing a degree of defensiveness over their earnings as PhillipCapital remain cautious on some ASEAN countries like Thailand and Indonesia. PhillipCapital expect overall Fees and Commission from DBS to continue performing healthily and remain a key earnings driver as they have shown robust momentum not only in trade-related contributions but also wealth-related and loans-related fees. Although trading income remains a volatile item, DBS has been seeing strong customer flows.