DBS Group - Maybank Kim Eng 2021-08-05: Visible Growth

DBS GROUP HOLDINGS LTD (SGX:D05)

DBS Group - Visible Growth

DBS (SGX:D05) delivered a strong beat against Street and MKE expectations in 1H21. The Group offers the clearest pathway to growth given its gearing towards Singapore and North Asia – which are benefiting from re-opening momentum. Concurrently, lower exposure to SE Asia shields it from resurging COVID, while increasing the likelihood of earlier reserve releases.
DBS's dividends have been restored to pre-pandemic levels, while its recent bolt on acquisitions, new retail wealth and supply chain financing initiatives together with sustainability financing could provide medium term catalysts for growth.

While PPOP declined 10% q-o-q, this was mostly a result of a high base effect of strong trading. Going forward, we expect momentum to turn positive supported by loan growth and fees.
DBS is geared towards larger corporates in Singapore and North Asia, where disruptions from COVID are limited and growth from economic re-opening is in a better footing. Management is guiding high single digit loan growth in 2021E and expect momentum to remain supported in 2022E particularly from large corporate and mortgage demand.
We estimate PPOP to grow at 7% CAGR 2020-23E despite a lower interest rate environment.

New NPA formation fell 47% y-o-y. Moratorium loans are < 1% of total of MAS minimum requirements. Credit charge guidance has been halved vs 1Q21.

We raise 2021-23E DBS earnings per share estimates by 1-5% to reflect lower provisions and better loans and fee income.
See
DBS has restored its 2Q21 target price for DBS has been raised to S$35.11. Maintain BUY.

Thilan Wickramasinghe Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-08-05

SGX Stock Analyst Report BUY MAINTAIN BUY 35.11 UP 33.710