DBS 1Q13 earnings pegged to jump 12% to $854m

Did its Rmb loans contribute a lot?

According to CIMB, it expects DBS to achieve a 1Q13 net profit of S$854m (up 12% qoq, 7% above consensus). In 4Q, DBS missed expectations because its Rmb loans only picked up late in the quarter. 

The bank took general provisions for the 4Q loan growth but did not enjoy a full quarter on interest contribution. At the same time, fee income was also light.

Here's more from CIMB:

We expect these trends to mean-revert in 1Q13, so NII and non-interest income should have tailwinds. The other differentiator could be the performance of the DBS HK.

DBS HK showed signs of turning around in 2012, with margins up 1bp in 4Q12 qoq, adding to earlier signs of a turnaround.

DBS HK has a 5% market share of loans in Hong Kong, but 50% share of the Rmb trade finance business. DBS HK has repositioned out of mass-market HK mortgages to focus on wealth management.

Both trade finance and wealth management look like catalysts that can drive fee growth in 2013, notwithstanding investment banking fees should still be buoyed by bond market activity and some IPO activity in Singapore.