OSPL - Market Pulse

DBS: In-line FY10 earnings

Summary: DBS Group Holdings released its full year results this morning. Full-year net earnings came in at S$1.63b (after goodwill of S$1018m recognised in 2Q10) or S$2.65b before goodwill. The former is in line with our projection of S$1.60b, but lower than market expectations of S$1.89b (based on consensus estimate from Bloomberg). Net Interest Income of S$4.32b and Non-interest Income of S$2.75b were also in line with our expectations. Loans grew 16% YoY or 3% QoQ to S$152.1b. Reflective of the soft interest rate environment, Net Interest Margin (NIM) fell from 2.02% in FY09 to 1.84% in FY10. On a quarterly basis, it slipped marginally from 1.80% in 3Q10 to 1.79% in 4Q10. Our rating for DBS is a BUY with a fair value estimate of S$16.00. We will review our estimates and provide more updates after the analysts’ briefing later in the day. (Carmen Lee)

Frasers Commercial Trust: Unit consolidation a positive Maintain BUY

Wonder if this morning's reaction to the results means it is moving to the $14.40 level?

* DBS net profit S$678 mln consensus S$660 mln

* DBS says wants to boost shareholder returns

* eyes boosting regional businesses

* Shares are up about 3.5 pct this year

By Saeed Azhar SINGAPORE, Feb 11 (Reuters) - DBS , Southeast Asia's biggest lender, said on Friday it wanted to boost shareholder returns and grow its regional business, after beating expectations with a 38 percent rise in quarterly profit on falling bad-debt charges and higher trading income.

The strong earnings, which came after DBS posted a record net profit in the third quarter, shows CEO Piyush Gupta's success in trying to turn around the bank's performance since taking over in November 2009. He has won investor praise for cleaning up DBS's balance sheet, sold non-core assets such as a small Indian unit and accelerated the bank's expansion into China with the purchase of RBS's portfolio in three major cities.

But lower interest rate margins have restrained growth for DBS, although analysts said that is likely to change in the months ahead as global rates are seen headed upward. " DBS is in a good position to strengthen the value of our franchise in Singapore in Singapore, Greater China, South and Southeast Asia and fortify our position as a leading Asian bank," Gupta said in a statement.

In presentation notes, DBS said it was focused on enhancing shareholder returns. Return on equity improved to 10.2 percent in the last financial year that ended in December from 8.4 percent a year earlier, it said. DBS, which kicked off earnings for Singapore banks, posted a net profit of S$678 million ($530 million)in October-December against S$493 million a year earlier.

That compared with an average forecast of S$660 million, according to six analysts surveyed by Reuters. Bad debt charges declined 59 percent to S$157 million from a year ago. Net interest income however fell 2 percent to S$1.1 billion as net interest margins declined by 23 basis points 1.79 percent in the fourth quarter.

Fees and commission income was flat at S$358 million, while trading income tripled to S$164 million. There are rumours that DBS, which wants to increase income from outside its core Singapore and Hong Kong markets, could buy state investor Temasek's 68 percent stake in Bank Danamon in Indonesia. However, the bank has dismissed the rumours as Gupta wants to avoid expensive buys after DBS got burned for overpaying for a bank purchase in Hong Kong a decade ago.

Gupta last year had announced plans to boost revenue from outside the bank's core Singapore and Hong Kong markets. He wants South Asia and Southeast Asia, excluding Singapore, to account for 30 percent of revenue in five years, with the same coming from Greater China. Singapore's share will drop to 40 percent from 60 percent in the same period.

DBS shares are up about 3.5 percent so far this year against rival United Overseas Bank's 3.4 percent gain. Shares of Oversea-Chinese Banking Corp have fallen about 3 percent so far this year after gaining about 9 percent in 2010 when it outperformed its rivals. ($1 = 1.279 Singapore Dollars)

(Editing by Vinu Pilakkott) ((Saeed.Azhar@thomsonreuters.com)(+65-64035664)(Reuters Messaging: saeed.azhar.reuters.com@reuters.net))

SINGAPORE, Feb 11 (Reuters) - Shares of DBS Group , Southeast Asia's biggest lender, fell as much as 1.9 percent on Friday after it reported better-than-expected quarterly earnings, as sentiment was hit by a weak market due to the political turmoil in Egypt, traders said.

At 0107 GMT, DBS shares were 1.8 percent lower at S$14.56 with over 1 million shares changing hands. DBS posted a 38 percent rise in quarterly profit on falling bad-debt charges and higher trading income, beating expectations.

The bank said its fourth quarter net profit was S$678 million ($530 million), compared with S$493 million a year earlier. That compared with an average forecast of S$660 million, according to six analysts surveyed by Reuters.

(Reporting by Charmian Kok) ((charmian.kok@thomsonreuters.com)(+65 6403 5666)

JPMorgan raises DBS Group’s (D05.SG) target to $24 from $18, and maintains an Overweight call. This follows an increase in its estimated normalized ROE to 12.5% from 9.7% due to a 6.0%-19% positive revision in 2010-2012 earnings expectations.

DBS is on track to deliver 27% core earnings growth in 2010 though the stock is down over 5.3% in the past 12 months the bank is due to report 4Q net profit before the market’s open Friday.

“Investor skepticism on execution and expensive acquisitions is understandable, but we expect this to reverse as the new management delivers and stays disciplined,” JPMorgan analysts say.

The house also expects net interest margin income to expand due to a steepening yield curve. DBS shares are down 0.9% at $14.84.

read what other says.....

DBS- Technical Analysis

DBS stock remains in a valid uptrend. It managed to clear key resistance at 14.94/14.96 on good volumes last Wednesday. This break above the upper confine of a multi-month congestion signalled a possible longer-term bottom. Next mid-term upside target is seen at 15.74/15.80. Looking at the short-term picture, the stock faced resistance at 15.16 and then pulled back for a successful test of the rising 20-day moving average. Clearing the high at 15.16 would target 15.40 initially. A closing below next support at 14.82 would question the short-term bullish bias. Solid mid-term support is seen at 14.39/14.42.

/dbwarrants/

14.80 put expiring 1 Feb, let's see if the price can hold up or will drop upon expiry....

February 11/2011 will be the result day. In the meantime, price should be ascending. Good luck everyone and hopefully, everyone will get a big red packet. Smiley

Morgan Stanley recommends BUY with Target Price at $16.75

DBS Group Holdings (DBSM.SI, S$14.50): Undervalued Recovery: OW with S$16.75 Price Target (Nick Lord/Edward Goh)

Concerns overdone; Initiate at Overweight: We believe investor concerns over the timing of a cyclical recovery in DBS’s earnings, plus risks in the bank’s strategic transformation program and acquisition ambitions, are already reflected in the stock price. A drop in DBS’s loan impairment charge or continued increases in the Singapore dollar loan-to-deposit ratio plus a lack of cheap alternatives could push up the share price in the near term, we believe.
Market overly focused on risks: We expect DBS to produce the strongest EPS growth of any Singapore bank to 2014. This is not in the price, because investors worry about a lack of cyclical recovery if rates do not rise, and the risk that DBS’s organic transformation results in higher costs with no revenue benefits. What the market is missing, is that the bulk of DBS’s cyclical recovery in earnings will come from a lower bad debt charge, and it is already pricing in the assumption that rates do not rise. As to its organic transformation, we expect DBS to continue to benefit from a higher LDR in Singapore, but do not forecast any improvement in revenues elsewhere.
Expensive acquisition the key risk to our call: Despite reassuring comments from the CEO on this front recently, we expect the market to remain concerned that DBS may make an expensive acquisition in either India or Indonesia.

Life Is Great

If they love their stock very much

and you ask them to sell...

wait they don't like you. Smiley

epliew ( Date: 17-Dec-2010 19:45) Posted:

over rated bank....

sell lah.

Long term definitely is good stock....

over rated bank....

sell lah.

Is good time to take some profit around 14.50.

Preference shares earns you a higher dividends(guarantee).It does not has any voting rights.

You may sell off before it expires or convert it to ordinary share.

Ordinary shares prices fluctuates faster and has voting rights. It earns the normal declared dividends.

anyone here plss tell me whaz the difference between preference shares and ordinary shares... ...

Both sound the same b'cos the sentence contains shares ,,, ,,, right : )

Nice to see DBS making a comeback.. finally!

DBS announced the acquisition of RBS’s retail and commercial units in China yesterday. Actions are in line with Piyush Gupta’s plan to grow overseas contribution. This is largely a takeover of a small customer base in our view and we do not see any significant profit contribution. We currently have an Outperform recommendation with TP of S$17.00.

/cimb/

/i came i read i posted fy reading pleasure////

DBS off 0.1%; RBS China buy deemed modest

WRITTEN BY DOW JONES & CO, INC

WEDNESDAY, 15 DECEMBER 2010 14:11

/theedgesingapore/

Is this news?

krisluke ( Date: 14-Dec-2010 18:49) Posted:

DBS to raise $500m

Singapore’s largest bank, DBS, has taken the wraps off a $500 million preference share issue that qualifies for tier 1 capital to small investors.

The launch is the largest retail offering ever made in Singapore and dwarfs OCBC’s $250 million preference share issue for retail investors unveiled in 2008.

DBS has the option to further increase the offer to as much as $800 million.

The shares, which operate in a similar manner to bonds, pay an attractive dividend of 4.7 per cent a year for 10 years – well above the 0.125 per cent interest that a saver currently gets on a POSB savings account.

The offer follows DBS selling $1.7 billion worth of preference shares last month to institutional investors. And the retail tranche should prove just as popular, judging from the voracious appetite of institutional investors.

source: livetradingnews.com

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