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Pinnacle
Master |
09-Nov-2007 11:16
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S'pore DBS says higher price for TMB helps shareholders Singapore's DBS Group The bank, which has a 16.1 percent stake in TMB, said in a statement to Reuters that the higher price offered by ING would benefit all shareholders. ING said on Wednesday that it will buy 30 percent of TMB for about 460 million euros ($675 million) after the loss-making Thai bank rejected a last-minute rival bid from DBS and Deutsche. |
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Pinnacle
Master |
07-Nov-2007 22:24
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Dutch group ING wins battle for Thai TMB stake Dutch financial group ING <ING.AS> will buy a 25.2 percent stake in Thailand's TMB Bank <TMB.BK>, TMB officials said on Wednesday after the money-losing Thai bank rejected a last-minute rival bid. "The TMB board has picked ING after it made the best offer," a bank official told Reuters after the TMB board spurned a joint counter offer from Singapore's DBS Group <DBSM.SI> and Germany's Deutsche Bank <DBKGn.DE>. "ING will have a 25.2 percent stake in TMB after the share acquisition," said the official, who declined to be named. ING had raised its original offer of 1.40 baht each for new shares in TMB, he said, declining to give the final price of the share sale, which is part of a $1 billion recapitalisation plan for Thailand's sixth-biggest lender. DBS and Deutsche had offered 1.60 baht her share, or $618 million, for a bigger stake in TMB, a move that would have increased the DBS stake in the ailing lender to at least 25.2 percent from 16.1 percent, a banking source said. The offer by DBS was an abrupt change of heart by Southeast Asia's biggest bank by assets. News of the renewed interest came almost two months after it refused to take part in the recapitalisation plan, saying the Thai bank was not giving it sufficient management control to improve its performance. It also signalled the last move by outgoing DBS chief executive Jackson Tai, who has tried desperately to expand the bank's presence beyond its two key revenue centres, Singapore and Hong Kong. "It is an important regional banking opportunity and DBS is reluctant to leave Thailand," said Matthew Wilson, a banking analyst with Morgan Stanley. DBS STOCK DROPS DBS shares fell 2.3 percent, underperforming the broader market, as investors weighed its bid to raise its stake in TMB, which reported a huge 20.7 billion baht net loss in the first nine months of this year, compared with a net profit of 4.6 billion baht a year earlier. Canada's Bank of Nova Scotia (Scotiabank), U.S.-based private equity fund TPG Newbridge and General Electric have all bought stakes in Thailand's banking sector, which showed improved loan growth and earnings in the third quarter despite political uncertainty after last year's coup. But other analysts were sceptical about how effective DBS would be even as a strategic investor, since TMB has been struggling despite signs of improving loan demand ahead of national elections in December. "TMB could not get better instantly after recapitalisation. It needs time to clean up things as the bank has a load of problems, not just lack of money -- about efficiency of its staff and technology to improve," Finansa Securities head of research Ratchanok Dandamrongrak said. The stock has fallen about 35 percent this year, underperforming a 21 percent rise in the banking sector and a 31 percent rise on the Thai index <SETI>. DBS, in which Singapore state investment firm Temasek Holdings [TEM.UL] has a 28 percent stake, reconsidered its stance on TMB after the two sides resumed talks, a third banking source said. The investment in TMB had become increasingly painful for DBS since it wrote down the value of its stake by S$38 million ($26 million) in the third quarter -- the second quarter it booked an impairment for TMB -- and said it may cut the value further. The Thai bank had announced plans in October to sell the 25 billion new shares at 1.40 baht to raise 35 billion baht ($1.11 billion), which included selling 10.97 billion shares to a new investor and 2.14 billion shares to the investor's partners. After that, the investor would hold a 25.2 percent stake in TMB and its partners 4.92 percent through non-voting depositary receipts (NVDRs), an investment vehicle to allow foreign investors unlimited holdings in Thai stock. TMB, 31.2 percent owned by the Thai Finance Ministry, would also offer 5.59 billion shares to the ministry. If accepted, the exercise would reduce its stake to 26.2 percent. The Thai bank is forecast to make a net loss of 3.81 billion baht this year, but four analysts polled by Reuters Estimates see it making a 5.18 billion baht profit in 2008 on stronger loan growth and after two years in which it was forced to record high provisions for bad loans. |
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Pinnacle
Master |
02-Nov-2007 11:01
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CITI - Buy: Hong Kong Prime Cut 25bps, But HIBOR Falls Further Buy/Low Risk 1L Price (01 Nov 07) S$22.60 Target price S$25.50 Expected share price return 12.8% Expected dividend yield 2.9% Expected total return 15.7% Market Cap S$34,287M US$23,673M What's new ? HSBC has cut Hong Kong prime lending a further 25bps to 7.25% from 7.5%, following the US Fed's 25bp policy rate cut. We expect DBS HK to cut its prime rate from 7.75% to 7.5%, but with the recent falls in HIBOR, the pressure on spreads and margins seem to be finally easing. Impact ? The 3Q US credit crunch had impacted HIBOR and funding costs, but DBS noted in its post 3Q07 comments that the worst for Prime-HIBOR squeeze was likely over, with the HKMA injecting liquidity into the HKD money market. 3M HIBOR has fallen from a high of over 5.4% to 4.3%. Analysis?We show above the average Prime-HIBOR spreads over the past year. Oct 2007 remains a concern, but even assuming today's prime rate cut, the spread pressure has eased. If HIBOR continues to fall, further rate cuts could follow to help stimulate domestic demand and loan growth. |
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shplayer
Elite |
31-Oct-2007 08:51
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BT 31 Oct 07 Entreprenuership beats Foreign Talents anytime. Quek Leng Chan pips DBS for stake in China bank
Malaysian tycoon gains 20% stake in Chengdu Bank with 1.95b yuan bid
By CONRAD RAJ (SINGAPORE) Malaysian tycoon Quek Leng Chan has once again bested Singapore's DBS Bank, this time by gaining a 20 per cent stake in China's Cheng City Commercial Bank (Chengdu Bank). The contest was decided through competitive bidding.After a two-month process of weaning out numerous other contenders, DBS together with Mr Quek's Hong Leong Bank (HLB) and Calyon, the corporate and investment banking arm of French financial giant Credit Agricole, were asked to submit their bids for a 19.99 per cent interest in the enlarged capital of Chengdu Bank.
Last Thursday morning, the three placed their bids and, just after lunch, were separately asked to make their presentations on how they could be strategic to Chengdu Bank's expansion leading up to its initial public offering in two to three years' time. DBS's eight-man team was led by their head of Hong Kong and China businesses Frank Wong while HLB went in with a team of 10 led by Quek Leng Hai, who runs Guoco Holdings and is the younger brother of the Malaysian billionaire. Calyon's team was led by its head of Asia-Pacific operations. When the results were announced, perhaps to the surprise of HLB itself - the smallest of the three bidders - the Malaysian bank was declared the winner with its 1.95 billion yuan (about S$400 million) bid. 'It was a case of David beating Goliath and shows that size doesn't matter when you have the skills and quality,' a still ecstatic Yvonne Chia, HLB's group managing director who was also present during the bidding, told BT. A dejected Mr Wong was not even present when the results were announced but was said to have turned up later at a dinner hosted by the Sichuan bank. Top Chengdu officials attended the announcement of the results. So once again the wily Malaysian tycoon, who is a London-trained lawyer and loves to have a flutter at Las Vegas' gaming tables, had outfoxed DBS. He had first done so by exacting a huge premium when he sold his Hong Kong financial empire under Dao Heng Bank to the Singapore bank for some $10 billion in 2001. While Chengdu Bank, which was established only in 1996, is no Bank of China or a Industrial & Commercial Bank of China, it is among the top 20 city commercial banks in China and therefore no small prize for HLB which becomes the first Malaysian bank to have a stake in a Chinese bank. According to a statement issued by HLB, Chengdu Bank, with audited net assets of 1.36 billion yuan as at the end of 2006 when it reported net earnings of 12.4 million yuan, has 29 branches and 114 outlets in Chengdu, a city with a metropolitan population of over 11 million. It has been declared a hub for high technology, business and trade, finance, as well as transportation and communication by the State Council for South-West China. 'HLB believes in the growth potential of China and this will be Hong Leong Bank's maiden investment in China,' said Mrs Chia. She added: 'Chengdu Bank is a good business platform for our expansion into Western and Central China. Both parties have complementary strengths and would be able to leverage on each other's capabilities and resources to grow the business.' HLB, which currently has a network of more than 180 branches in Malaysia and a branch each in Singapore and Hong Kong, said: 'This investment is part of HLB's long-term goal of establishing a bigger presence in Asia.'
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Pinnacle
Master |
29-Oct-2007 10:27
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UOB KH - 3Q07 : Strong fees & commissions and net interest income DBS reported 3Q07 net profit of S$610m, up 11% yoy (& 9% qoq), driven by fee & commission income, net interest income but partly offset by higher allowances. Net interest margin narrowed 3 bps yoy to 2.14%. Net interest income rose 15% yoy to S$1,048m, due with gross loans expansion of 22% yoy offsetting the negative impact from 3 bps yoy NIM narrowing. Net interest income was up a marginal 2% qoq, as the 7 bps qoq margin compression (of which 2 bps was due to full-period impact of sub-debt issue completed in May 07, 2 bps due to lower SIBOR and 3 bps due to narrowing of HK Prime-HIBOR spread) offsetted the benefits from 6% qoq gross loans growth. The current 3-mth SIBOR of 2.6% is 80bp lower than the level at end-2006. Though we expect NIM to narrow further in future quarters, due to a weak SIBOR (on the back of further weakness in the US Fed Funds rate), we believe loan expansion will help to expand net interest income. Non-interest income rose 20% yoy. Fee & commission income surged 38% yoy to S$403m. The key contributors were a) stockbroking (+157% or S$44m yoy); and b) loan-related income (+61% or S$25m yoy). However, net trading loss of S$63m is a reversal from 3Q06?s S$121m gain, due to (1) credit spreads on securities and credit-linked derivatives widening, causing a reduction in market valuation of credit trading portfolio, and resulting in a S$47m loss on trading business (versus S$116m gain in 3Q06); and (2) trading loss from other businesses of S$16m (versus 3Q06?s 5m gain) arising from mark-to-market losses of S$42m from S$1.12b of CDOs held by ROSA, a conduit managed by DBS. None of the CDOs whose value has been marked down is in default. Expense-income ratio of 42.4% was marginally lower than 3Q06?s 44.2%, despite the 12% yoy increase in expenses. None of DBS? S$2.36b of CDOs has defaulted, but DBS made total allowances of S$70m (comprising S$43m charged to P&L and S$27m marked against existing cumulative general allowances) for the S$275m of CDOs that had some exposure to US sub-prime assets. This S$70m allowance is in addition to the S$42m for ROSA. DBS also made a S$38m impairment charge for its 16% stake in TMB Bank in Thailand, to reflect the further reduction in TMB market valuation to S$270m as at 30Sep07. DBS declared an interim ordinary dividend of 20¢ ps (less 18% tax). Total dividends for 9M07 amounts to 60¢, which is 18% higher yoy. We are forecasting FY07 gross dividends of 84¢ ps, which gives a yield of 3.8%. DBS upgraded to BUY. Shareholders of DBS had a YTD total return of 0%, which is lower than the 13% simple average for the 3 Singapore banks, partly due to market concerns that allowances for CDO could be high. However, DBS has clarified that none of the CDOs whose value was marked down is in default. We roll over the base for valuation to FY08, and using a 2.4x P/RNTA (a discount to OCBC?s 2.6x), arrive at a DBS target price of S$25.00. |
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Pinnacle
Master |
29-Oct-2007 10:15
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CIMB - DBS Group Holdings (S$22.00) - 3QFY07 results - A huge sigh of relief Above expectations, a sigh of relief. 3Q07 net profit (S$610m) was much above our expectations ($547m) and the Street?s (S$552m). S$610m net profit included a S$38m impairment charge for TMB as well. Underlying core trends were very strong. Results showed buoyant loans volumes were sustained, capital market related-fees were unexpectedly powerful and CDO-related impact was much below expectations. Our immediate reaction to this was a huge sigh of relief. Good underlying core income growth. Loans grew 6% qoq in 3Q, accelerating from 2Q?s +4.7%. Mortgage momentum slowed a little (SG mortgage +2% qoq, HK mortgage +1% qoq) but the slack was taken up by investment trusts and holding companies. NIMs compressed 7bps to 2.14%, partially attributed to the full impact of a sub-debt issuance (-2bps) in May and partially from narrower lending spreads in HK (-3bps) and Singapore (-2bps). DBS guided for margin pressure to sustain into 4Q as SIBOR remains low and the Prime-HIBOR spread remains tight. Fees showed surprisingly strong growth bolstered by stock-broking and investment banking fees. Management sounded very bullish on capital market-related fees, guiding that significant issues exist in the pipeline while inroads made into Middle East can plausibly provide respite against the tide of a US slowdown. Low CDO-related provisions simply highlight low exposure to US sub-prime. Total CDO-related provisions was S$85m; S$42m under trading income for MTM losses for CDOs under its ROSA conduit, and S$43m under specific and general allowances. Loss ratio for ABS CDOs with US sub-prime exposure was 30% - this is more conservative than international banks? loss ratios. Low level of provisioning versus Merrill simply reflects DBS?s low exposure to US sub-prime. Outside of CDOs, NPL ratios improved (1.2%) and loan provisions remained stable at 11bps. DPS of 20cts unchanged. 3Q ROE was a respectable 13.0%. Tier-I ratio came down to 9.2%, reflecting strong growth in loans. We raise our FY07-08 EPS by 3% to reflect stronger underlying trends, particularly on fees. Maintain Outperform, raise target price from S$27.00 to S$27.50. Our target P/BV is 2.0x, based on Gordon growth (ROE 13.7%, COE 8.9%, growth 4.2%), Our target price is raised from S$27.00 to S$27.50, on minor BV adjustments. We believe that these results will do much to quell concerns on CDO provisioning. We expect further MTM CDO losses to be minor and not detract from the positives seen in DBS?s strong underlying profits. We believe that inroads made in Middle East and China (QDII fund) is positive for fees and should not be underestimated. |
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Pinnacle
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29-Oct-2007 09:27
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Phillip Securities - BUY
Net earnings exceeded our expectation by 8% to S$648m (+17.4% yoy, -2.4% qoq, 2Q07: S$664m). However, DBS took another one-time impairment charge of S$38m due to lower market valuation of TMB, which brought net earnings for the third quarter down to S$610m. Net interest income rose to S$1.048b (+14.9% yoy, +2.04% qoq, 2Q07: S$1.027b) due to higher customer loan volumes. However, interest margins dipped 7bps over the quarter to 2.14% (3Q06: 2.17%, 2Q07: 2.21%). Non-interest income increased 19.9% to S$489m (+19.9% yoy, -6.7% qoq, 2Q07: S$524m) over the year. Better fee income of S$403m (+37.5% yoy, +8.6% qoq) was offset by a total trading loss of S$63m due to widening credit spreads and MTM losses of S$42m from ROSA. Expenses were capped at S$652m (+11.6% yoy, -1.2% qoq, 2Q07: S$660m) as salary and computerization costs declined over the quarter. Cost to income ratio improved to 42.4% (3Q06: 44.2%, 2Q07: 42.6%). Total allowances for credit and other losses amounted to S$80m, which included a S$33m charge for CDOs that have US sub-prime asset exposure with an additional S$10m general charge for such CDOs. DBS declared a quarterly dividend of 20 cents per share, similar to the previous quarter. We think that DBS? share performance has been overweighed by unfounded fears from CDOs and sub-prime issues. Thus, we are keeping DBS? target price to S$25.40, 1.80x FY08 NAV based on our Gordon growth model. Maintain Buy. |
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Pinnacle
Master |
26-Oct-2007 13:44
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DBS THIRD QUARTER EARNINGS UP 17% TO SGD 648 MILLION BEFORE ONE-TIME ITEMS Record net interest income and fees as business volumes continue to expand Strong underlying business trends despite charges against credit trading and CDO-related investments DBS Group Holdings reported today net earnings of SGD 648 million for the third quarter, an increase of 17% from a year ago as broad-based growth in business volumes brought net interest income and fees to new highs. For the nine months, net earnings rose 19% to SGD 1.93 billion. Earnings this quarter were 2% below the second quarter as improved contributions were offset by a less favourable trading performance as well as mark-to-market losses and allowances for collateralised debt obligations (CDOs). While none of DBS? SGD 2.36 billion of CDOs as at 30 September has defaulted, total allowances of SGD 70 million were set aside for the SGD 275 million of CDOs that had some exposure to US sub-prime assets. This comprised SGD 43 million in specific and general allowances charged to the profit and loss account and SGD 27 million marked against existing cumulative general allowances. In addition, there was a markto- market loss of SGD 42 million charged to net trading income relating to CDOs held by Red Orchid Secured Assets (Rosa), a fully-consolidated conduit managed by DBS. The global market turbulence also affected DBS? structured credit and credit trading activities, which caused negative swings in trading income between the comparative periods. A separate impairment charge of SGD 38 million was taken for DBS? 16% stake in TMB Bank in Thailand. The charge reflects the further reduction in the market valuation of TMB to SGD 270 million as at 30 September. After inclusion of this impairment charge, net earnings for the third quarter would be SGD 610 million. Net interest income up 15% as loans expand 23% Net interest income rose 15% from a year ago and 2% from the previous quarter to SGD 1.05 billion as asset volumes increased. For the nine months, net interest income grew 15% to SGD 3.05 billion. Customer loans grew 6% during the quarter to SGD 104.7 billion, bringing growth to 23% from a year ago. As with recent quarters, the increase was led by corporate and SME loans in Singapore, Hong Kong and the region, while Singapore housing loans picked up further. Net interest margins fell seven basis points to 2.14% as interest spreads in Hong Kong fell and interest rates in Singapore were lower. Compared to the second quarter, the third quarter reflected the full-period impact of a subordinated debt issue launched in May which also contributed to the margin decline. Broad-based, 38% rise in fees Net fee income increased 38% from a year ago and 9% from the previous quarter to a new record of SGD 403 million. Compared to a year ago, this quarter?s growth was led by stockbroking, investment banking, loan syndication and wealth management, reflecting continued strength in a broad range of activities. Wealth management product sales rose 15% from a year ago to SGD 1.83 billion, with underlying demand for unit trusts remaining strong during the quarter. For the nine months, net fee income increased 27% to SGD 1.08 billion. Trading income recorded a net loss of SGD 47 million compared to a net trading income of SGD 100 million in the previous quarter. Wider credit spreads for trading securities and credit-linked derivatives were the main contributors to negative trading income. For the nine months, net trading income from trading businesses amounted to SGD 222 million compared to SGD 464 million a year ago. Cost-income ratio improves to 42% Expenses of SGD 652 million were 1% below the previous quarter as staff and other operating costs were actively managed. Compared to a year ago, expenses were 12% higher. The cost-income ratio improved to 42% from 43% in the previous quarter and 44% a year ago. For the nine months, expenses increased 13% to SGD 1.97 billion as staff and computerisation costs rose. The cost-income ratio improved slightly from 44% a year ago to 43%. Asset quality improves further With a continued benign operating environment, the non-performing loan rate improved further to 1.2% from 1.4% in the previous quarter as the amount of nonperforming assets fell 5% to SGD 1.43 billion. Specific allowances for loans fell to SGD 28 million or 11 basis points of loans, which were lower than most recent quarters. Total allowances, including those for CDOs and other non-loan assets, amounted to SGD 80 million. Total cumulative allowances reached 130% of non-performing assets compared to 124% in the previous quarter. Excluding one-time items, return on equity improved from 12.3% a year ago to 13.0%, while return on assets was unchanged at 1.14%. Return on equity for the nine months increased from 12.4% a year ago to 13.2%, while return on assets improved from 1.14% to 1.20%. The total capital adequacy ratio of 14.0%, with the tier-1 ratio at 9.2%, compared with 14.7% and 9.4% in the previous quarter. DBS Vice-Chairman and CEO Jackson Tai said, ?Results for the quarter were reassuring despite turbulence in the global credit markets. ?We took steps over the last five years to diversify our earnings across businesses and geography to supplement our strength in corporate banking and the markets. During the quarter, this diversification delivered solid results despite market disruptions on some areas of our Treasury and Markets business. Net interest income and fees rose to new highs as business volumes continued to expand. We produced yet another quarter of higher customer loan volumes, continued cost discipline, and continued improvement in asset quality. ?As I have announced my intention to step down at year-end, I acknowledge with pride the dedication and talent of our staff in building a more-competitive Asia-based bank. I am confident that DBS will continue to deliver value to our customers and growth to our shareholders.? The Board of Directors declared a quarterly dividend of 20 cents per share, similar to the previous quarter. Total dividends for the nine months of 60 cents per share were 18% higher than the same period last year. |
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mirage
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26-Oct-2007 12:00
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CIMB has a 12-mth target price of $27.00 for DBS Bank. OUTPERFORM rating. http://www.remisiers.org/research//DBS-QT-251007[27%20cimb].pdf |
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Pinnacle
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26-Oct-2007 11:49
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CITI - 3Q profit S$610m, core S$648m; CDO impact S$85m, TMB S$38m Buy/Low Risk 1L Price (25 Oct 07) S$21.30 Target price S$25.50 Expected share price return 19.7% Expected dividend yield 3.1% Expected total return 22.8% Market Cap S$32,315M US$22,198M 3Q07 core profit S$648m (2Q: S$664m) ? 9M07 reported profit S$1.79bn, core profit S$1.93bn, 75.4% of Citi FY07E S$2.56bn. Flat qoq 3Q preprovision profit S$885m, S$85m CDO-related charges and an additional 3Q S$38m impairment for TMB. Solid +6%qoq loan growth, but 7bps fall in margins likely due to HK rates pressures. More to come from the mgmt briefing later today. 3Q07 core S$648m (2Q core S$664m) ? 3Q07 NII S$1,048m +2% qoq: loans S$106bn, +6% qoq, margins 214bps (2Q: 221bps), LDR 74%. Total non-II S$489m, down 7% qoq on S$47m trading book losses, offsetting strong fee growth of +9% qoq. Costs S$652m, flat qoq; cost-income ratio 43%. Pre-provision profit S$885m, -1% qoq. Core provisions S$57m (2Q: S$64) before TMB, CDO charges. Tier-1 ratio 9.2%. Explaining reported profit vs. core profit: TMB impairment ? 2Q07 (reported profit S$560m, core S$664m) excludes S$159m TMB impairment, and a write-back of S$55 property provision. 3Q07 (reported profit S$610m, core S$648m) excludes an additional 3Q07 S$38m impairment provision for TMB. Explaining the CDO charges ?The CDO profit and loss impact of S$85m is regarded as normal business provisions. It includes a S$43m specific provision against the S$275m CDOs with sub prime exposure, plus a S$42m mark-to-market charge relating to its asset-backed commercial paper vehicle. Another S$27m was earmarked against existing general provisions hence no profit and loss impact. |
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Pinnacle
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26-Oct-2007 10:25
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DBS Q3 net rises; only small subprime hit DBS Group The results pushed up DBS shares more than 3 percent -- their biggest one-day rise in a month -- and underscored the strength of Asia's fast-growing economies that helped DBS weather the turmoil in U.S. credit markets. "The big relief is over the subprime concern the market had. The provisions were much less than the headline numbers of DBS's subprime exposure," said Teng Ngiek Lian, chief executive of Target Asset Management, which manages over $3 billion worth of Asian stocks including DBS shares. DBS, whose shares lagged rivals this year and fell 5.3 percent in July-September, has the biggest direct exposure among Singapore's banks to risky debt such as collateralised debt obligations (CDOs). "It is difficult to be absolutely certain there won't be writedowns in the future, but even if there are they may not be very large," said Ambreesh Srivastava, senior director financial institutions at Fitch Ratings. "The real toxic debt in their portfolio is relatively small." Target's Teng said DBS' loan growth and low non-performing loans ratio reflects the strength of the economy in Singapore, which provisionally saw third-quarter growth of 9.4 percent from a year ago and accounts for about two-thirds of DBS profits. Credit Suisse said the market would have to revise up DBS's full-year profit forecast, from a S$2.41 billion median forecast of 16 analysts on Reuters Estimates before the quarterly result -- up from S$2.27 billion in 2006. NO CDO DEFAULTS DBS said none of the CDOs it holds have defaulted, but it set aside S$70 million for its exposure to U.S. subprime mortgage debt, and marked down S$42 million against its exposure to an investment vehicle that invests in risky debt derivatives. It also took a S$38 million charge on its investment in Thailand's TMB Bank The writedowns and mark-to-market losses were below market expectations since four analysts had forecast an average S$125 million in writedowns alone. DBS, in which state investor Temasek Holdings [TEM.UL] has a 28 percent stake, posted July-September net profit of S$610 million compared with S$552 million a year ago and ahead of an average forecast of S$481 million from five analysts polled by Reuters. Excluding the TMB impairment charge, net profit was up 17 percent at S$648 million, the bank said. "Results for the quarter were reassuring despite turbulence in the global credit markets," said Chief Executive Jackson Tai, who leaves the post later this year. DBS shares were hit hard in August when it said CDO exposure was almost double its initial declaration, at $1.6 billion of CDO holdings with $188 million exposure to U.S. subprime mortgages. Third-quarter lending grew 23 percent from a year ago, underpinned by a Singapore property boom and recovering construction sector. DBS gets a third of its earnings from Hong Kong. Interest income rose 15 percent to S$1.05 billion, while net fee income rose 38 percent to S$403 million. United Overseas Bank UOB shares were up 1.9 percent early on Friday, and OCBC up 2.2 percent. |
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Pinnacle
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26-Oct-2007 09:14
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KIM ENG DBS posted 3Q07 core net profit of S$610m, in line with our expectation of S$600m and beat market consensus of S$535m. Core earnings was up 10.5% Y/Y and 9% Q/Q on the back of strong net interest income and fee income. Loans growth remains robust, up 23% Y/Y and 6% Q/Q, led by corporate and SME loans in Singapore, Hong Kong and the region, while Singapore housing loans picked up. NIM slide from 2.21% to 2.14% over the quarter in line with lower interest spreads in Hong Kong and Singapore. Net fee income continues to surge, up 38% Y/Y and 9% from the previous quarter. Growth was broad-based led by stockbroking, investment banking, loan syndication and wealth management. Wealth management product sales rose 15% from a year ago to SGD1.83b underpinned by strong demand for unit trusts. With regards to CDO exposure, the group provided higher provisioning, within our expectation. While none of DBS's S$2.36b of CDOs as at 30 September has defaulted, total allowances of S$70m were set aside for the S$275m of CDOs that had some exposure to US sub-prime assets. This comprised S$43m in specific allowance and S$27m general allowances. In addition, there was a mark-to-market loss of S$42m charged to net trading income related to CDOs held by Red Orchid Secured Assets (ROSA). Separately, the group also provided an impairment charge of S$38m for DBS's 16% stake in TMB Bank Thailand. Asset quality improves further, with non-performing loans rate easing from 1.4% to 1.2%. The group declared dividend per share of 20 cents in 3Q07. This brings total dividend per share for 9M07 to 60 cents, 18% higher than the same period last year. |
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26-Oct-2007 08:55
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DBS Group Holdings reported net earnings of S$648 m for 3Q07 (+17% yoy). Earnings this quarter were 2% below the second quarter as improved contributions were offset by a less favourable trading performance as well as mark-to-market losses and allowances for CDOs. The bank took a S$43 m in specific and general allowances charged to the profit and loss account and S$27 m marked against existing cumulative general allowances for the S$275 m of CDOs that had some exposure to US sub-prime assets. In addition, there was a mark-to-market loss of S$42 m charged to net trading income relating to CDOs held by Red Orchid Secured Assets (Rosa), a fullyconsolidated conduit managed by DBS. A separate impairment charge of S$38 m was taken for DBS? 16% stake in TMB Bank in Thailand. The charge reflects the further reduction in the market valuation of TMB to SGD 270 million as at 30 September. After inclusion of this impairment charge, net earnings for the third quarter would be S$610 m. DBS performed better than expected with core earnings exceeding our estimate by 8%. These were driven by better net interest income with lower than expected allowances charges relating to the CDOs. |
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26-Oct-2007 08:23
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Singapore's DBS Q3 net profit rises 11 pct on credit woes Singapore's DBS Group Holdings The Singapore-based bank, in which state investor Temasek Holdings [TEM.UL] has a 28 percent stake, posted a net profit of S$610 million for its third quarter from July to September, compared with S$552 million a year ago and against an average forecast of S$481 million from five analysts polled by Reuters. Excluding the S$38 million impairment charge on TMB, the net profit was up 17 percent at S$648 million. But forecasts were wide depending on estimates of trading losses and lower income from fees. The stock was hit in August after it disclosed that it had US$1.6 billion of holdings in collateralised debt obligations including $188 million exposure to U.S. subprime mortgages. DBS said that its exposure to CDOs was almost double what it had initially declared after it had to inject cash into a special-purpose vehicle that invests in CDOs. This was the second straight quarter of write-downs for the bank after it took an impairment on the value of its 16 percent stake in Thailand's TMB Bank Shares of DBS fell 5.3 percent in the third quarter, while Oversea-Chinese Banking Corp United Overseas Bank DBS derives about one-third of its earnings from Hong Kong, where it has around a third of its assets. The bank is also in the process of building up its China operation. |
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25-Oct-2007 17:17
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Tomorrow will announce their quarterly financial report. Is it a beautiful result, that's why so bullish today? No CDO writedown? |
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25-Oct-2007 17:14
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The power of CIMB. +$0.60!!! Tomorrow |
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25-Oct-2007 14:05
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So bullish? CIMB - DBS Group Holdings (S$20.70) - Expect ABS CDO provisions to feature Earnings in focus We expect DBS to report GAAP net profit of S$647m and core net profit of S$547m. DBS is the first bank to report this season. Results are due out on 26th October. We expect possible 9-10bps margin compression on a qoq basis to offset any loan volume gains. We expect fee income to show a big 27% qoq decline as capitalmarket related fees dry up but factor in some qoq improvement in trading income as 2Q07 was a very low base. Our S$131m provisions include S$100m of CDO-related MTM losses. Provisions cut FY07 EPS by 4%, lowered margin assumptions in low interest rate envrionment trim FY08-09 EPS by 1%. We have trimmed FY07 EPS estimates by 4% primarily on higher provision expectations. FY08-09 estimates also see a marginal cut on lower margin assumptions. Valuation and recommendation Maintain target price of S$27.00 and Outperform rating. In our opinion, concerns with DBS have already been reflected in its share price. DBS is currently the cheapest among the three Singapore banks, trading at about 13% P/BV valuation discount to peers. We acknowledge that DBS will find it tough to beat market estimates this season as MTM provisions could be big while core earnings trend, particularly on the margin front could look subdued. However, with discount valuations, we see no reason to be too negative on DBS especially as the CDO write-downs will soon become water under the bridge while any distinct weakness in fees and trading income could eventually prove to be temporal under the extreme conditions of 3Q. We retain our Outperform rating and keep our target price of S$27.00, based on 2.1x CY07 P/BV. |
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22-Oct-2007 15:40
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Citigroup Global Markets Buy: TMB Recap Suggests Further Dilution and Impairment Charges Target price S$25.50 DBS TMB stake cut to <7% from 16% ? TMB has announced a Bt35bn recap plan with a new strategic investor*. TMB is to offer 25bn shares at Bt1.4/share, raising issued shares to 43.5bn (from 18.5bn), with a pro forma Sept '07 BV/S of Bt1.45. DBS owns 2.98bn TMB shares, but in not participating faces stake dilution to c.6.8% from 16.1%, and possible further impairment charges. TMB recap math?Sept '07 equity Bt27.9bn (Bt1.51/shr, 18.5bn shares). 25bn new shares at Bt1.40 raises equity to Bt62.9bn (Bt1.45/shr), but assuming a Bt19.3bn** provision to build NPL cover to 80%, (rest boosts Tier-1 to c.10% from 7%), TMB?s "clean" equity would be Bt43.5bn (Bt1/shr, 43.5m shares). DBS impairment math? Post a S$159m June '07 impairment (TMB price then Bt2.18) DBS? S$296m (Bt6.5bn) 16.1% stake has a mkt. value (at Bt1.71) of Bt5.1bn (S$236m), and on our "clean" BV/S Bt1 is worth Bt2.98bn (S$138m). As at Sept '07 (TMB share price Bt1.93), we value the stake at S$268m, implying a small S$28m impairment charge for 3Q07. Improving franchise profitability key to value? TMB?s 3Q07 normalized ROAA of 0.5%** suggests much to be done to match the >1% ROAA average of the top 10 banks. TMB?s weak net interest margin and high costincome ratio (3Q07: 67%) stand out as areas for improvement. |
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16-Oct-2007 09:25
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DBS could seal Singapore's biggest office leasing deal ever. The bank is said to be in advanced stages of negotiating to lease up to one million sq ft at Marina Bay Financial Centre's (MBFC's) phase two. If concluded, this could put into the shade the deal for 508,298 sq ft that Standard Chartered Bank signed in April for MBFC's phase one, which will be ready in the first quarter of 2010. The second phase of the project, slated for completion in late 2011, includes a high-rise tower that will have around 1.4 million sq ft of office space. DBS is expected to pay a gross monthly rental of around $10 per square foot, according to industry players. Stanchart's lease inked earlier this year reflects an effective rent of about $8 psf, they added. BT understands that the exact quantum of space that DBS will take at MBFC's second phase has not been finalised and it may well be less than one million sq ft if the bank decides that it makes more economic sense to find some cheaper space elsewhere. One million sq ft is roughly three quarters of the office space at One Raffles Quay, which was completed last year. Sources say that in addition to MBFC's phase two, DBS is scouting for around 300,000 sq ft of space for backroom operations. Sources tipped Changi Business Park as being the most likely candidate, although Alexandra Distripark, which is being transformed into a business park, may also be a contender. (BT) |
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15-Oct-2007 12:26
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Merrill Lynch - BUY Simultaneous margin squeeze in Singapore and HK We see DBS facing renewed downward margin pressure in both of its main banking markets, and unfortunately this will likely occur at the same time. In Singapore, SIBOR has resumed its decline post the US Fed rate cut, falling to 2.44% in recent days from 3.44% at the start of the year. This will be felt at DBS principally through lower funding spreads, as close to half of its deposits are lowcost and thus don?t re-price down with market interest rates. In HK, where DBS?s deposit franchise is comparatively weaker and thus it can be seen as a depositprice- taker, a narrower prime-HIBOR spread will also impact its margins. Estimates cut by 4-5% in 2008-09 on lower margins Our new estimates factor in margins falling from 2.18% in 2006 to 2.12% in 2007 and then bottoming at 2.07% in 2008. The cut to profits was not greater since our previous numbers had already included some margin decline. Net interest income is still expected to grow at an average 11% pa over 2007-09 due to 15% pa average loan growth. Likely offsets to the negative margin forces - such as a rising LDR, Singapore mortgage rates being sticky downwards (so far) and aggressive re-pricing down of fixed-deposits ? will only be partial. Nice recovery from August lows; we trim PO to S$27 DBS?s share price has recovered 21% from its year-low of S$18.7 in mid-August when fears over its exposure to CDOs peaked. But, DBS still trades at more than a 15% discount to peers on P/BV and PER metrics versus a 5% historical average. Our revised PO of S$27 (trimmed from S$28) implies 21% upside. DBS trades at 1.6x P/BV and 12.7x PER on 2008 estimates, with a 4% dividend yield. |
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