DBS

DBS: DBS is expected to be able to weather any turbulence brought about by the normalisation of US interest rates as developed markets, such as SG and HK, account for 82% of its total income and 65% of total loans.

However, loan growth has decelerated where DBS has only clocked loan growth of 1.9% qoq in 1Q15 and is expected to be lacklustre in the subsequent quarters. DBS would benefit from the drawdown of pre-committed corporate loans, which could be lumpy.

On the other hand, management expected NIM to expand in 2Q15 from the re-pricing of corporate and housing loans, with some residual positive impact occurring in 3Q15 as well.
DBS is also the prime beneficiary of higher interest rates in SG, where a 1% increase in I/R would improve DBS’s NIM by 10bp to 1.78% and improve ROE by 0.6ppt to 11.3%.

UOB Kay Hian maintains its BUY rating with TP: $25.08, based on P/B of 1.56x. Growth drivers include regional businesses such as global transaction service, wealth management and SMEs.