DBS

DBS: 3Q15 results came above estimates, with a rise in net profit to $1.07b (+6% y/y, -5% q/q), taking 9M15 earnings to $3.32b, or 77% of street's full year estimates.

For the quarter, the solid performance was led by higher net interest income of $1.81b (+13% y/y, +4% q/q), backed by robust loans growth (9% y/y, 2% q/q) and a NIM expansion to 1.78% (3Q14: 1.68%, 2Q15: 1.75%), its highest in 14 consecutive quarters.

Notably, the growth in loans was boosted mainly by currency effects. Eliminating that, loans grew 3% (-1% q/q) from regional corporate (particularly HK) and Singapore housing loans, but partially offset by a decline in trade loans.

However, non-interest income came in 1.4% lower at $899m (-5% q/q) due to a drop in investment banking activities and reduced wealth management fees.

Operational matrices remained stable, with cost-income ratio at 45% (3Q14: XX%, 2Q15: 45.3%), and loan provisions at $178m (3Q14: $177m, 2Q15: $137m).

Asset quality remained healthy with NPL ratio of 0.9% (3Q14: 0.9%, 2Q15: 0.9%) and loan-loss coverage at 161% (2Q15: 160%), while Tier 1 CAR reduced to 12.9% (3Q14: 13.4%, 2Q15: 13.4%).

At the current price, DBS is valued at 1.12x P/B.