DBS - RHB Invest 2017-08-04: Sequentially Flat NIM

DBS - RHB Invest 2017-08-04: Sequentially Flat NIM DBS GROUP HOLDINGS LTD D05.SI

DBS - Sequentially Flat NIM

  • DBS’ 2Q17 results (announced this morning) were in line with expectations. 1H17 core net profit was up 4% YoY. The positives include relatively stable asset quality (NPL ratio only up marginally to 1.5%), sequential loan expansion of 1.5%, and higher interim dividend of SGD0.33/share. 
  • The negatives include a sequentially flat NIM (unlike the widening NIMs recorded by its two peers). 
  • We will review our earnings forecasts and TP after the analyst briefing to be held later today.

DBS released its 2Q17 results this morning. 

  • Highlights for 2Q17: 
    1. 2Q17 net profit was SGD1,130m. Excluding one-time items, 2Q17 net profit of SGD1,140m was down 6% QoQ. 1H17 net profit of SGD2,375m represented 53%/50% of ours and consensus 2017 net profit forecasts respectively. We rate the results as in line;
    2. 2Q17 net interest margin (NIM) of 1.74% was unchanged QoQ, and 13bps narrower YoY. The YoY decline was due to softer SGD interest rates; i
    3. 2Q17 credit cost (specific loan allowances) of 40bps was higher than 1Q17’s 26bps;
    4. 2Q17 loan loss coverage was 100%, vs 1Q17’s 103%;
    5. 2Q17 loans were 1.5% higher QoQ, with strength from the manufacturing and building & construction sectors. Loans were up 6.4% YoY; 
    6. The Board declared 1H17 dividend of SGD0.33 per share, up 10% from the recent half-yearly payout. The scrip dividend will apply.
  • More highlights after the analyst briefing to be held later today.

Leng Seng Choon CFA RHB Invest | http://www.rhbinvest.com.sg/ 2017-08-04
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