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DBS results beat expectations “by a mile”: CIMB

DBS' 1Q13 results beat expectations “by a mile,” or 11%-15%, on broad-based strength in all revenue, CIMB says.

It notes net interest income rose 2.6% on-quarter as NIMs unexpectedly expanded and loans grew 6.2% on-quarter, while fee income was “strong all around,” especially for trade-related and capital-markets-related fees.

http://www.theedgesingapore.com/the-dail...-cimb.html

From OCBC:

Summary: DBS Group Holdings Ltd posted stronger-than-expected 1Q13 net earnings of S$950m versus market expectations of S$824m. The key contributors were the strong double-digit increase in Fee and Commission Income, +25% YoY to S$507m, as well as higher Trading Income (+26% YoY to S$410m). Management appears optimistic about its performance, as its investments in Singapore and the region are showing results. It is also confident of a double-digit loans growth for the year. Net Interest Margin (NIM) bucked the downtrend, and rose from 1.62% in 4Q12 to 1.64% in 1Q13. Overall, we adjusted Non-Interest Income higher, but this was mitigated by higher costs and allowances. Using the historical average P/B of 1.3x (2006-2012), we raised our fair value estimate to S$18.28 (previously S$15.94). Maintain BUY.

DBS goes XD on 13 May.

The Straits Times
www.straitstimes.com
Published on May 03, 2013
DBS shares soar on record Q1 profit
Net profit up 2% to $950m, driven by surge in non-interest income
By Magdalen Ng

DBS Group Holdings' share price soared to its highest since 2008, as the bank reported record first-quarter profits yesterday, boosted by a surge in non-interest income.

For the three months ended March 31, DBS posted a net profit of $950 million, up 2 per cent from a year ago, surpassing analysts' expectations of $824 million according to a Bloomberg survey.

This was on the back of a 7 per cent increase in total income to $2.32 billion.

The results sent DBS' share price soaring by 83 cents, or 5 per cent, to an intra-day peak of $17.59 in trading yesterday, the highest since it closed at $17.67 on May 6, 2008.

Net interest income, however, fell 1 per cent to $1.32 billion, as net interest margins declined 13 basis points to 1.64 per cent from a year ago. The impact of the decreased margins was dampened by a 13 per cent spike in loans from a year ago to $224 billion.

This has prompted chief executive Piyush Gupta to raise his forecast for loans growth from 10 per cent for the full year, to "low double digits".

"We had a one-off large ticket loan in the first quarter but, aside from that, we still grew 4 per cent (from the previous quarter). The pipelines are still very robust," he added.

Non-interest income, which includes fee and commission income, grew 21 per cent from a year ago to $990 million, as the bank expanded its annuity businesses such as wealth management, and trade and transaction services.

Mr Gupta added that during the quarter, there was also strong contribution from market-related fee income such as investment banking and stockbroking fees.

Expenses were up 6 per cent from a year ago to $952 million, but the cost to income ratio declined from 41.7 per cent a year ago to 41.1 per cent.

While asset quality improved, with the non-performing loans ratio down from 1.3 per cent a year ago to 1.2 per cent, the bank's specific allowances for loans were up from nine basis points to 21 basis points.

Mr Gupta said: "Overall, the credit environment is not as good as it was two years ago. We said in the middle of last year that India was beginning to get a bit more tricky, but it is not massive. We do not have large exposures which are in trouble."

Analysts were surprised by the solid set of results posted by South-east Asia's largest lender, and maintained buy calls on the counter.

However, OCBC analyst Carmen Lee noted that, even though estimates for DBS have been adjusted marginally, she does not expect a repeat of the strong fees and commissions, and trading income for the rest of the quarters this year.

Mr Gupta is optimistic about the bank's performance but noted that there are uncertainties ahead, given that the economic data coming out of the United States and China for the past two months seems to be weak.

"How much all of these add up and will you wind up with a massive slowdown over the next quarter or two is tough to call. But our basic approach continues to be 'be resilient and be nimble'. If the core of our business is consistent and solid, and we can be nimble at the margins, we can take advantage."

On whether DBS has plans to make inroads in the Myanmar and Vietnam markets, Mr Gupta said that there is interest, but noted that the two markets are not going to "move the needle for any big bank in the foreseeable future".

"We are reluctant to hold minority positions. We would rather do control transactions - we like being operating managers," he said on the possibility of acquisitions in Vietnam.

He also said that DBS' partners in Malaysia have gained approval from Bank Negara to talk to a couple of interested parties to buy out DBS' stake in Hwang-DBS.

He declined to comment on the status of the acquisition of Bank Danamon, which is still pending regulatory approval from Bank Indonesia.

Earnings per share remained unchanged from a year ago at $1.58, while net asset value per share was up from $12.28 last year to $13.35.

DBS shares closed 76 cents higher at $17.52 yesterday.

songyuan@sph.com.sg

Does DBS has the authority to approve or agree with the reciprocity condition?

Indonesia may let DBS own 67% of Danamon on conditions: Official

SINGAPORE — Indonesia may allow DBS Group to buy Temasek Holdings’ entire 67-per-cent stake in Bank Danamon if certain conditions — including a reciprocity principle — are met, said Mr Bambang Brodjonegoro, Head of the Fiscal Policy Office at Indonesia’s Finance Ministry yesterday.

DBS’ bid to buy up to 99 per cent of Bank Danamon — which was set to become the largest acquisition in Indonesia — has been delayed after the Indonesian central bank last year lowered the maximum stake any investor can own in a bank.

Bank Indonesia regards reciprocity of investment conditions, such as the ability of Indonesian banks to open branches in Singapore, as being an important factor in allowing the deal to go ahead, Mr Brodjonegoro told reporters on the sidelines of a conference in Singapore.

http://www.todayonline.com/business/indo...s-official

Will Danamon investment still feasible with the smaller stake?

DBS gets nod for Danamon but it’s a smaller stake

SINGAPORE — DBS Group got approval yesterday from Indonesia’s central bank to acquire a 40 per cent stake in Bank Danamon, giving South-east Asia’s largest lender less control than it had sought, although Bank Indonesia (BI) Governor Darmin Nasution said DBS might be allowed to acquire additional stake if Indonesian banks got the green light to open full-fledged branches in Singapore.

The stake is estimated to cost about 28.6 trillion rupiah (S$3.4 billion).

http://www.todayonline.com/business/dbs-...er-stake-0

The deal will lapse... IMO, and in the article's opinion too...

DBS Bank deal seen derailed as Indonesia bars control: Real M&A

Indonesia’s central bank last week gave approval for Singapore-based DBS, which bid US$6.8 billion ($8.6 billion) for all of PT Bank Danamon Indonesia, to buy only 40% of the company as the regulator pushes for Indonesian banks to have equal access in Singapore. With the agreement expiring in three days, Danamon is trading at a larger discount to its takeover price than any pending deal in Asia larger than US$500 million, according to data compiled by Bloomberg.

While a minority stake in Danamon would cut DBS’s reliance on Singapore, which is Southeast Asia’s least lucrative lending market, Indonesian ownership laws can bar the bank from ever gaining full control. The original deal, struck more than a year ago, assumed DBS would buy all of Danamon, and the terms must be changed before a smaller purchase is logical for DBS, said CMC Markets Singapore Pte. The other option is for DBS to scrap the transaction altogether, according to IG Asia Pte.

“At this point, it’s not a good deal for DBS,” Kelly Teoh, a Singapore-based market strategist at IG Asia, said in a phone interview. “A minority stake doesn’t make sense for DBS, without the control to steer the business in the direction they would like. I won’t be surprised if they step away from this.”

http://www.theedgesingapore.com/the-dail...l-maa.html

Temasek - incubator, DBS - pipeline. UOB and OCBC much better - business builders...

DBS wants Temasek's entire 67.4% Danamon stake

Published on Jun 13, 2013

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DBS Group Holdings wants to buy Temasek Holdings' entire 67.4 per cent stake in PT Bank Danamon Indonesia, the local lender has said.

DBS chairman Peter Seah told The Business Times (BT) in an interview on Tuesday that a smaller stake would require a review of the economics of the deal.

"We entered into an agreement to buy Temasek's stake in Danamon. Having done that, we hope it'll get approval (from the Indonesian authorities)," BT quoted Mr Seah as saying. "Indonesia is an attractive market and fits very well into our Asian strategy."

DBS wants to buy Temasek's stake of 67.4 per cent in Danamon, and the rest of the Indonesian bank from the market, for $9.1 billion altogether.

However, Bank Indonesia's (BI's) then governor Darmin Nasution said last month that DBS' stake in the Indonesian lender would be capped at 40per cent, in line with foreign ownership limits that the Indonesian government proposed late last year.

DBS had responded by saying that it "hopes the application will be approved as originally submitted and will continue to be closely guided by Bank Indonesia".

The bank declined further comment when approached by The Straits Times yesterday.

When asked by BT whether DBS would consider buying 40 per cent of Danamon first and the rest at a later stage, Mr Seah said: "At 40 per cent, the economics will be challenging, as it will not allow us to integrate with our existing business in Indonesia.

"It will require a review of the economics of the transaction."

The Monetary Authority of Singapore had said last month that it welcomed BI's approval for DBS Holdings to acquire up to a 40 per cent stake in Danamon.

"Given the good cooperation between Singapore and Indonesia, MAS and BI are exploring further access into each other's markets. In the case of Indonesian banks in Singapore, this will be by way of a broader provision of financial services, both in wholesale banking and to, for example, Indonesian students and work permit holders in Singapore," a spokesman said.

YASMINE YAHYA

IMHO with the plunging Rupiah right now, DBS is much better off withdrawing from the deal altogether. Their offer is starting to look overpriced. All this hemming and hawing is just weakening DBS's position further with BI AND MAS.

Can anyone tell me what is the normal ROA of our 3 local banks (DBS, OCBC & UOB)? What is the formula? Is it Net Income Before Taxes over Total assets? Or some other formula?
Thanks.

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(07-07-2013, 08:22 PM)Temperament Wrote: [ -> ]Can anyone tell me what is the normal ROA of our 3 local banks (DBS, OCBC & UOB)? What is the formula? Is it Net Income Before Taxes over Total assets? Or some other formula?
Thanks.

i have googled and surprising i have very good data. And the source is DBS.

Another way looking at it is how come Malaysia GOV, is so much better or "smarter" in investing the people's "EPF" than our Papys. For not one year or two; i think for time immemorial already, if i am not wrong.

Oops!
Sorry i actually wanted to post this under Tamasek hit profit of ....