DBS

DBS: DBS shares hit a new 6½ year high today at $18.60, taking its year-to-date return to ~8.1% return. The strong share price performance is hardly surprising, given that DBS had been widely tipped as the top stock pick by brokers, versus its local peers over the past year. Maybank-KE opines that DBS is the most poised to benefit from potential interest rates hikes, through higher NIMs and having the lowest SGD loan-deposit ratio, as a lower ratio means the bank has proportionately more readily available funds to lend at higher interest rates. Given its dominant position versus its local peers in China, DBS appears the most ready to ride on the next wave of economic growth in China, while the internationalisation of CNY will also be beneficial to the bank. Furthermore, DBS has the best asset quality, with trade finance loans forming a large portion of its portfolio and NPL declining q/q in the most recent quarter. DBS currently trades at 1.26x P/B versus OCBC’s 1.38x and UOB’s 1.29x. Accordingly, the street has the following ratings for the three local banks: DBS: 24 Buy, 4 Hold, 0 Sell; consensus TP $20.80 OCBC: 12 Buy, 11 Hold, 3 Sell; consensus TP $10.63 UOB: 8 Buy, 16 Hold, 4 Sell, consensus TP $24.26